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How iPhone 3.0 May Revolutionize The Smartphone Industry

With a new business model for third-party software, peer-to-peer networking, and richer interfaces for third-party hardware, Apple's got a potential game-changer in iPhone 3.0.

It's easy to see why many people were underwhelmed by Apple's iPhone 3.0 sneak peek last Tuesday. Most of the attention focused on dull features like cut-and-paste and multimedia messaging -- capabiliites that have long been in demand by iPhone users, but which competitors have had for a long time now.

Eric Zeman sniffed that the announcement added features from 2007 to the iPhone. Ed Hansberry asked whether Apple pushed the mobile device forward with iPhone 3.0 and provided an answer: No.

I think I can see how Eric and Ed came to their conclusions. Early reports and blogging about the new iPhone focused on Apple finally getting features, like cut-and-paste and multimedia messaging, where the device lagged far behind its competitors. Catch-up games are just plain boring.

iPhone 3.0, however, does have three features which will be game-changing, if Apple and its developers exploit those features to their full potential. Apple revolutionized the cell phone industry when it introduced the iPhone in 2007. The company did it again last year when it introduced the iPhone 3G and App Store. And now it looks like it will happen a third time when iPhone 3 software ships in the second half of 2009.

The three features that can revolutionize the smartphone industry are peer-to-peer networking, APIs for hardware add-ons, and sales within applications.

Let's take them one at a time.

Peer-To-Peer Networking

The iPhone 3.0 software will enable peer-to-peer connections between iPhones and iPod Touches over Bluetooth, if they're near each other physically. The demo Apple provided on Tuesday was dead simple -- anybody who's tried to pair a headset with a cell phone knows it can be mildly confusing, but the peer-to-peer networking on the iPhone 3.0 software doesn't require pairing. Simply press a button in any app enabled for peer-to-peer connectivity, and the device will search for nearby iPhones and Touches that are running the same app. The other person taps a button to accept an incoming connection, and you're linked.

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