• by Mark Walsh  @markfwal, June 7, 2010

Apple didn't disappoint its legions of fans Monday, unveiling a new, sleeker version of the iPhone complete with a raft of new features including a front-facing camera for video-chatting, a higher-resolution screen and longer battery life.

The highly anticipated iPhone 4, which will go on sale June 24, was showcased Monday by Apple CEO Steve Jobs at the company's annual Worldwide Developers Conference in San Francisco, where new products are often rolled out. Never one to avoid hyperbole, Jobs called the latest edition of its signature device "the biggest leap we've taken since the original iPhone."

With mounting competition from phones running on Google's Android platform, including Sprint's newly launched Evo 4G phone from HTC, Apple is under more pressure than ever to maintain its advantage in the rapidly growing smartphone category. Later this month, Jobs said Apple would surpass 100 million devices sold on the iPhone operating system -- now called iOS -- across the iPhone, iPod touch and iPad.

With the introduction of its iAd platform in April, Apple will also go head-to-head with Google in mobile advertising. To that end, the company said it will roll out its new ad unit July 1, with initial advertisers including Nissan, Citigroup, Unilever and AT&T pledging a total of $60 million so far, committing a total of $60 million to be among the first brands to use iAds.

And while it was rumored that Apple might replace Google as the default search engine on the new iPhone with Microsoft's Bing, Jobs said Google would remain the main search option, but with Bing added as an alternative along with Yahoo Search.

From the standpoint of most consumers and Apple loyalists, however, among the most eagerly awaited features delivered in the latest iPhone was a front-facing camera for video calls. And at 24% lighter than the current phone and sporting a boxier glass front and back wrapped in a stainless steel band, Jobs called it the "thinnest smartphone on the planet."

Other features that the Apple boss highlighted in his presentation included a new high-resolution "retina display" that can pack four times as many pixels in the same space. Looking at the old and new displays side by side, the retina display looked noticeably sharper.

Other new additions included a built-in 3-axis gyroscope for enabling enhanced game play and an LED flash for the new 5-megapixel camera. The upgraded camera also includes high-definition video capture and the ability to edit videos using the new iMovie program for the iPhone.

Jobs said the new A4 chip and a larger battery in the iPhone 4 would allow 40% more talk time, 10 hours of Wi-Fi surfing or watching video and 40 hours of music. The new phone in the U.S. will cost $199 for the 16GB model and $299 for the 32GB model with a new 2-year contract. The 8GB version of the iPhone 3GS will be bumped down to $99, allowing Apple to continue to offer a lower-cost smartphone.

Taken together, the new features in the iPhone 4 add up to a substantial advance for the Apple device, according to Noah Elkin, a senior analyst at eMarketer. "This seems to be a more significant step forward than the 3GS was to the 3G," he said. "As always, Apple has looked at what its core audience does with the iPhone and made improvements that expand the appeal and utility for the device."

In that vein, the company is counting on the new phone, along with the recently released iPad, to provide a growing user base for its forthcoming iAd units. The hefty $60 million total in upfront buys so far for the format underscores the interest iAd has generated among brands and agencies.

Jobs estimated that amount would be nearly half of projected mobile display advertising in the second half of 2010.

He cited a group of roughly 20 launch advertisers featuring big names across the auto, retail, media and insurance categories including Sears, Target, TBS, Disney and Geico. Apple reportedly has been seeking up to $10 million for marketers to be part of the initial batch of iAd advertisers, and $1 million otherwise.

Jobs demonstrated the iAd with a full-screen, animated ad from Nissan that allows users to enter a contest to win its fully electric Leaf model. He showed how a user could tap on the ad to expand it or tap a button in the corner to close it and go back to an app.

Aside from the creative options afforded by the iAd, Phuc Truong, head of Mobext, Havas Digital's mobile marketing arm, said a key draw was Apple's ability to offer anonymous iTunes purchase behavior to target iAds. "We feel we're buying true audiences here based on media consumption," said Truong, whose firm is working with Sears on its upcoming iAd effort.

With 2 million sold units sold in the last two months, the iPad is becoming a legitimate ad platform in its own right. In his keynote, Jobs said the 8,500 native apps on the Apple tablet have been downloaded 35 million times so far, which he called a "great number."

When it comes to Apple's iBooks e-reader app, 5 million books have been sold to date. He added that five of the six top U.S. publishers said iBooks already accounts for 22% of e-book sales, a figure Jobs expects to increase with further iPad sales. The iBooks app will also be extended to the new iPhone.

With 225,000 apps overall now available in the App Store, you'd think Apple might soon shut the door to new titles. But don't bet on it. High-profile new additions on the way this summer include new apps from Netflix and for popular social game FarmVille from Zynga this summer.