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Apple's iPhone 3.0 Adds Features, Rewards Developers

The beta of Apple's next iPhone operating system supports in-app purchases, peer-to-peer connections, Bluetooth, Spotlight, turn-by-turn directions, and new app business models.

Apple on Tuesday released a beta version of its next generation of iPhone software, which addresses many nagging complaints while bolstering the developer community.

With more than 800 million applications downloaded from the App Store in eight months, Apple knows the success of the iPhone 3G is tied to its developers. With the iPhone 3.0 software, Apple opened up a host of new options for content creators, including new business models, peer-to-peer connectivity, turn-by-turn directions, and the highly coveted cut and paste.

"Apple really moved the bar forward in a significant way," said Michael Gartenberg, VP of strategy and analysis at Interpret. "They've addressed the end-user features people have been clamoring for ... but most importantly they've upped the ante in the developer space. This lets developers create a whole new level of apps we haven't seen before on any platform."

The company said it has received a strong response from the developer community since it released the original software development kit, as there are more than 25,000 applications in the App Store. Apple wants that momentum to continue, and the 3.0 software includes more than 1,000 new application programming interfaces.

The App Store was like the iTunes Music Store in that it only allowed an initial point of purchase, but content creators will be able to charge for additional content within the application. For example, if you purchase a game for the iPhone or iPod Touch, a developer could sell more levels within the game. The developer gets to set the price and keep 70% of the revenue, and the transactions are handled through iTunes. Free apps will not be able to charge for content once they've been downloaded.

Apple also is trying to make the iPhone more social, as the updated software will enable users to have peer-to-peer connectivity over Bluetooth for things like multiplayer gaming and business card exchanges. The back end is taken care of by Apple's Bonjour, and users don't have to pair devices, as an iPhone will be capable of automatically discovering nearby devices.

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