Latest upgrades underwhelm, but iPhone still holds lead

For a company whose iPhone products have set the agenda for the mobile phone industry for the past two years, Apple's announcements this week at its Worldwide Developers Conference in San Francisco were underwhelming.

Maybe I'm jaded or have been following things too closely, but there was little in what the company had to say about the iPhone that surprised me. The event certainly lacked one of the company's "one more thing" moments, which company CEO Steve Jobs has used so famously in the past to make an unexpected announcement.

Much of what Apple Senior Vice President Scott Forstall had to say about the update to the iPhone's underlying software, for example, was merely a rehash of what the company unveiled in March. Turn-by-turn direction, background notifications for third-party software, the ability to make purchases of updates or add-ons within applications; Apple had announced all of it before.

Other news from the event, particularly having to do with the new iPhone 3G S, had been widely bandied about by rumor sites or Wall Street analysts for weeks or even months. The higher-resolution camera with video recording and editing capabilities, the built-in digital compass, the support for AT&T's new higher-speed data network, the drop in price for the iPhone 3G to $99 and even the "3G S" moniker of the new model had all been floating out there for awhile.

And much of what hadn't been widely discussed was fairly obvious. Given that the iPhone 3G had the same basic innards as the original iPhone, you'd expect Apple to revamp the new model and make it run faster. Allowing it to support the Nike Plus software gives the iPhone the same capability already built into the iPod Touch. Better battery life - at least outside of actual talk time - is a welcome advance, but an expected one, given how quickly the previous two iPhone models burn through their batteries.

Indeed, considering how much was already known or speculated about what Apple would announce, what was more surprising was what the company didn't talk about.

Despite persistent rumors that Apple has some kind of touch-screen netbook in the works, the device didn't make an appearance. While the company dropped the price for the entry-level iPhone by $100, it didn't announce any corresponding cut in the price of AT&T's data service, which is still too pricey for many pocketbooks.

In terms of features, the company is adding tethering - the ability to connect the phone to a computer so the latter can use the phone's Internet connection - but Apple declined to say if or when AT&T would allow tethering on its network.

More disappointing for me as an iPhone user is that even with the new software update and the new phone, Apple's smart phones still won't be able to run multiple applications at once. That's a feature other smart phones have long had and one that the Palm Pre has more recently demonstrated can be done smoothly and elegantly. It's a feature iPhone owners may long for as they download and run more and more applications on their phones.

The lack of multitasking points to a broader issue. Many features Apple is adding to the iPhone are already available on rival phones. When it comes to adding multimedia messaging, turn-by-turn directions or a camera that can record video, Apple is playing catch-up.

But as unsurprising as Apple's announcements may have been, the company is unlikely to lose its momentum. To the contrary, Apple is likely to lure a whole new set of consumers with the $99 price for its entry-level iPhone, just as it did last year when it dropped the price of its least expensive phone from $400 to $200.

That new cohort of iPhone owners will provide yet another incentive for developers to create even more applications for the gadget. With the iPhone 3.0 software, Apple is already making the device more attractive to developers by allowing them to do more with the phone and to charge for incremental updates to their programs.

Apple is creating something of a virtuous circle for the iPhone. It's getting the gadget into the hands of increasing numbers of consumers. That large and growing audience is luring increasing numbers of developers who are creating a growing library of applications for the device. And that library of applications makes the iPhone even more useful and attractive to consumers, likely attracting even more of them to the gadget.

As underwhelmed as I was by the announcements, I'm not ditching my iPhone. Instead, I can't wait to play with all the new features in the 3.0 software.

I wouldn't trade in my iPhone 3G for the 3G S, but mainly because I still have a year to go on my AT&T contract, and I don't want to pay the upgrade charge AT&T would most likely hit me with. But if I were shopping for a smart-phone today, I'd probably buy the iPhone 3G S.

As much as I liked the Palm Pre I recently tested, the 50,000 applications - and growing - for the iPhone mean there's just a lot more you can do with it now and for a long time to come.

(Contact San Jose Mercury News reporter Troy Wolverton at twolverton@mercurynews.com or 408-920-5021.)

(c) 2009, San Jose Mercury News (San Jose, Calif.).

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