• by Steve Smith , Staff Writer @popeyesm, June 23, 2009

The first thing I learned about upgrading to the iPhone 3G S is that the purchase comes with its own "family plan": domestic headaches.

"So how much is an iPhone family plan?" my daughter asked, as the still-shiny old 3G model sat abandoned on an ottoman, which itself was more than she could stand.

"You just got a car," I reminded her.

"I'll pay for it," she volunteered, not remembering that the car insurance for which she is responsible already eats half the monthly income from her summer job. We're still working on that living-within-her-means thing.

Aside from the heartburn over who gets the old iPhone, the 3G S upgrade is proving to be worthwhile if only because of the much-improved speed combined with the promise of new OS 3.0 functionality and other hardware improvements.

Many of the most important developments on the iPhone really come from the new OS that launched last week. In the first few days of playing with the software, I am impressed by the potential for the new in-app billing system. Game publishers can offer incremental levels and content providers can open up select access to new content. I think this will be a test bed for pay content models that could refract back onto the Web.

Last week at OMMA Publish, Time Inc.'s head of digital John Squires said that he saw greater traction for paid content models in emerging platforms like mobile devices. I agree, especially when the payment infrastructure is as seamless and incremental as this.

A quiet giant in the mix will be the unified alert system. The new OS uses a push-like system that can send an alert to you when there is new content. I am already getting pinged from AP News, which is using the system in an interesting way. Instead of just sending a breaking news headline with a link to the specific story, the service sends an alert for news it hasn't even composed into a story yet.

This is a more efficient and less bothersome approach than content providers' simply doing SMS alerts. You can turn the alerts on and off for any provider in the iPhone's Settings, for instance. The system lets apps stay at the surface of a user's consciousness. For branded apps, the push service opens up the possibility of alerting users to sales and special offers. Many branded apps quickly become invisible or forgotten on the iPhone deck as their utility or novelty wears off. Even a cute and disposable branded app could have some extra shelf life if the maker promises coupons via an alert system.

The new OS also allows direct downloads of video and audio. I would love to see app and mobile Web site publishers integrate this into their mix. Now a publisher or a brand marketer can offer more durable downloadables directly to the user. Perhaps more important, applications now can pull in live video streams. Does this mean that individual cable and network providers could disintermediate that entire tier of mobile TV aggregators?

I am also very taken with the ways in which the next gen OS and hardware will start pushing out some established remote device categories. The OS 3.0 update alone adds turn-by-turn directions and better voice recording features, for instance. Tom Tom will come out with a combination of GPS mapping and peripheral hardware for the car this summer, which make me wonder why I will need a separate GPS. The voice memo features, while available from third-party apps before, is now so easy to make and share that a digital recording device is redundant in most cases.

In the 3G S I am less taken with the upgraded camera (auto and user-selected focus and an extra megapixel) than I am with the video. This is better than expected. It is not very high-res, but the frame rate and color fidelity are as good as rudimentary camcorders. I had a video shot, trimmed with the on- deck editor and on YouTube in a couple of minutes.

There seem to be two implications here. First, the new category of pocket cams like the Flip is likely doomed. Second, soliciting user-generated content of a decent order becomes that much more practical. In terms of functionality, Apple is catching up to others. But in video quality and versatility, this is on an order I have not seen yet.

Speaking of quality of experience, I think that overall fluidity and speed are the two most important qualities in blending the 3G S with the 3.0 OS. For the last few years, the onus has been on mobile phones to prove to consumers and to marketers that they can be a real interactive media platform. But in most cases what we gained in portability from mobile media we lost in speed and quality.

When consumers expect a sluggish, lower-res experience, they simply are less eager to engage a broad range of content. The 3G S is so much faster that it encourages even more content use. In miniature I now can expect the sort of snappiness I get from a desktop Web browser. Apps are not only at my fingertips, they are available at the snap of that fingertip. All of this makes a big difference in the rate and range of consumption. When your phone produces media that is comparable to the media other dedicated devices produce -- and can share that media more seamlessly -- then we have a credible platform.

The 3G S and 3.0 OS are at once catching up and advancing the art of mobile. In each of the last three years, Apple has succeeded in reframing the mobile picture. The original iPhone showed us we could have cell phones and interfaces we didn't hate. The 3G and App Store roll-outs essentially changed the game for mobile content distribution altogether.

But this year we get a less dramatic but still significant advance. In the software and the hardware, we start to see the phone become a more varied, deeply ingrained element in people's daily functions, their media consumption and their new role as media makers. The deeper, broader integration of the phone into everyday life is my early takeaway from these launches. The sum may be more than the parts.

"So what will it add up to?" my daughter persists on her own iPhone agenda.

"With an extra line, required data plan and the bump to unlimited texting I think we are talking about $60 more a month," I say, hoping to sticker-shock her away from the idea.

"I can use less gas. I can help you with your columns more if I have an iPhone. I can test all of the stuff you don't care about."

"You know you would get the old model. It doesn't do video."

"That's OK," she reassures me. "I can deal. I have been getting your hand-me-downs since the Game Boy. I would be happy. Er, when do you think the next iPhone comes out?"