Apple’s job was even tougher today than ever before. Not only did it have to offer a better phone than its previous three generations — it also had to offer something new that wasn’t already leaked in the press.
While none of the new features is breathtaking, Apple (NSDQ: AAPL) once again is providing good enough reasons for existing iPhone users to upgrade and for new users to adopt the platform. The price, the new form factor, and even new features — like better resolution and camera, video chat and HD video-recording and editing — make for the complete package. Steve Jobs couldn’t have explained that intersection better this morning at WWDC: “Apple’s not just a technology company. it’s more than that. It’s the marriage of that plus the humanity — the liberal arts. It’s the hardware and software working together…It’s not just a great new camera system, it’s the video and software built in, like iMovie for iPhone. It’s not just a front-facing camera, but 18 months of work to come up with software so you won’t even notice when you make a call.”
To be sure, Apple has to keep up its rapid pace of innovation. Even though it down-played the competition this morning, it should consider Android and others an increasing threat. Android market share may only be half of iPhone, but it’s on its heals for sure, offering more choice and form factors. Honestly, what this phone and software release does should scare other competitors, like Research In Motion’s BlackBerry and Microsoft (NSDQ: MSFT), which both have OS updates coming that are supposed to bring the platforms up to date — but will make them look far behind.
Once again, Apple isn’t first to the table with some of its features, but the execution is where it excels. The video-chat feature and forward-facing camera is called *FaceTime*, and lets users connect with other iPhone 4 owners over wifi without creating buddy lists, or entering any other information. While the EVO 4G launched on Sprint’s network on Friday and offers a forward-facing camera, it doesn’t come anywhere close to offering that ease of use — in fact, it uses an independent third-party app. Apple said its video-chat software took 18 months to build, and was made completely out of open standards. It shows because it works. Likewise, Apple didn’t just add HD video recording, like other phones have, it created iMovie, which lets you completely edit a clip, including adding background music and location to a movie — all from the phone. It costs $4.99.
The final component is price and availability, and Apple has found a good partner in AT&T (NYSE: T). The phone will be heavily subsidized and cost $299 for a 32 GB model and $199 for a 16 GB model. The key is that current iPhone users will be able to upgrade immediately at those prices if their contract expires in 2010. Subscribers will have to sign a new two-year contract, which is in AT&T’s best interest if its close to losing its exclusive grip on the iPhone anytime soon.

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