(CNN) — When Apple starts selling what it bills as the fastest, most powerful iPhone yet on Friday, the company’s latest entry will only heat up the already sizzling smartphone landscape.

Got smartphone fever? A new version of the Apple iPhone goes on sale Friday.

Fans, techies and ordinary consumers eager to purchase the new iPhone 3GS may be preparing to stand in line at Apple stores around the United States and seven other countries. But they have more choices than ever when it comes to phones that act like mini-computers.

“We expect that [smartphones are] going to be the fastest growing consumer segment for quite some time,” said Ryan Reith, a senior research analyst for technology research firm IDC.

“It’s all about connecting to the outside world.”

The U.S. smartphone market grew by 68 percent last year and is projected to grow by 20 percent in 2009 and almost 25 percent next year, according to IDC. Compare four smartphones »

No wonder companies are rushing to meet the demand for sleek mobile devices that combine e-mail, data, music, photos — all in the palm of one’s hand.

Interested in something other than the iPhone? The options include the new Palm Pre, Research in Motion’s BlackBerry Storm or phones powered by Google’s Android or Microsoft’s Windows Mobile operating systems.

The key is having access to the Internet anytime, anywhere.

“Mobile Web browsing is a huge thing,” said MG Siegler, a writer for the technology news site TechCrunch. “People especially want to get on the Internet and do the things they’re doing when they are at their [home] computers, which is social networking and sharing photos.”

When it comes to mobile Web surfing, the iPhone seems to be the king. A recent report by AdMob found Apple’s device generated 65 percent of mobile HTML browsing, a statistic that didn’t surprise Siegler.

“The Web browser on the iPhone has been up to this point far superior to what it is on some of the other phones out there,” he said. “The great thing about the iPhone is that you don’t have to have a mobile specific page. You can look at the regular page and just see it perfectly fine.” Read about the new iPhone’s features

All about apps

While Apple has lots of buzz and appeal, it’s not the dominant smartphone player. The company had only about a 20 percent share of the U.S. smartphone market in the first quarter of this year, a distant second to Research in Motion’s 55 percent slice of the pie during the same period, according to IDC.

Apple is the undisputed leader, however, when it comes to mobile applications — the software programs that let users do everything from play games to track their calorie consumption and everything in between. Sign up to receive information about CNN’s iPhone app

Apple’s App Store has a whopping 50,000 applications available, and a number of its competitors recently launched their own stores in the hopes of catching up. It won’t be easy: BlackBerry’s App World, Palm’s App Catalog, Microsoft’s Windows Mobile Catalog and Google’s Android Market have only a fraction of Apple’s offerings.

“It’s pretty clear that Apple has the lion’s share of people who want to develop mobile apps. It’s a great distribution platform,” said Erica Ogg, a writer for CNET News.

Some competitors are trying to lure developers to their platforms by letting them keep more of the money generated by their apps. While Apple offers a 70/30 split — with developers getting to keep 70 percent of the revenue and the company taking 30 percent — Research in Motion is offering a more favorable 80/20 split, Reith said.

Ironically, industry observers believe Apple’s success itself may eventually drive some developers to competing stores where their apps would be less likely to get lost in the crowd and have a greater chance of standing out.

“I would think that developers would want to look at a lot of these other platforms, like the Palm Pre, because they would still be so early on in the development cycle that they could get their app out there,” Siegler said.

“If the Palm Pre ends up taking off and sells millions of units then they’re much more likely to be successful.”

Speed matters

In fact, Siegler believes the Pre could be the biggest wildcard right now because it’s the first smartphone since the iPhone to use multi-touch. The feature lets users maneuver around the interface by using their fingers — double-tapping the screen to zoom in or out, for example, or “pinching” with their thumbs and forefingers to do the same thing.

Beyond the technology inside smartphones, the focus now is also on improving the infrastructure that services them.

“You’re going to start to see in the next year Verizon and Sprint, followed by probably AT&T and T-Mobile, start to increase their networks so you’ll have Internet speeds on your device that will be almost equivalent to broadband within your house,” Reith said.

All of this technology comes at a price. The iPhone 3GS, for example, starts at $199, with a required two-year contract that will have consumers shelling out at least $70 a month with AT&T. Both Reith and Siegler don’t see the monthly fees changing any time soon, which may cool some consumers’ smartphone fever.

“Definitely more people are interested in smartphones, but I think the costs of the data plans are for a lot of people prohibitive,” Ogg said.

“Especially with the way people’s budgets and finances are today, there’s still plenty of room for the free phone that comes with your plan that does basic things.”

JUNE 9, 2009

Look!

Applications for mobile devices date back to the 1990s, when Palm—by far the largest PDA player at the time—built an open platform that developers soon filled with thousands of applications. Users downloaded applications to PCs and synchronized them with their PDAs.

Enter the Apple App Store in July 2008.

“Apple did not invent either the model of aftermarket applications or the notion of building a store to house them,” says Noah Elkin, eMarketer senior analyst and author of the new report, Mobile Applications: Moving Beyond Apple, “but it did succeed in radically improving an existing idea.”

Excitement over the iPhone and App Store transformed these functional utilities into full-blown consumer experiences. Apple and others in its wake have jolted the mobile advertising market and are paving the way for paid branded applications.

As a result of rising smartphone popularity, eMarketer projects that mobile Internet access will see significant gains over the next five years, with the number of mobile Internet users reaching 134 million in 2013.

Global economic forces are taking their toll on the mobile device market, but smartphones have been spared the ravages of the economic downturn.

Even in the face of a worldwide recession, the International Data Corporation (IDC) expects smartphone shipments to grow by 3.4% this year, and expand at triple the rate of feature phones in 2010.

This sales growth will dramatically reshape the device market. By 2013, Informa predicts smartphones will make up 38% of all handset sales worldwide, more than double their share in 2009.

“As integrated devices grow more sophisticated in functionality and more accessible in price, consumers are responding by upgrading their handsets,” says Mr. Elkin. “And once they have experienced the mobile Internet through improved browsers or installed applications, they appear unwilling to let it go.”

The size of the mobile applications market is something of a moving target, given how quickly app stores are proliferating and their catalogs growing. Piper Jaffray, one of few organizations to project the extent of the growth, estimates that combined spending on consumer and business mobile applications will top $13 billion worldwide by 2012, a nearly fivefold increase over 2009.

“It is increasingly evident that for many marketers, mobile applications constitute a necessary avenue for reaching and engaging with their customers, either by building and marketing a proprietary application or sponsoring a third-party app,” says Mr. Elkin. “In both cases, the essential challenge remains: to understand consumer behavior and craft experiences that not only resonate with a target audience but also integrate with other channels.”

APPLE has unveiled “the most powerful iPhone we’ve ever made”, complete with video camera and a new “Find My iPhone” feature.

The iPhone 3GS will be available in some countries, including the US and UK, on June 19, but will launch in Australia on June 26.

The 16-gigabyte iPhone 3GS will cost $US199 ($248), and the 32-gigabyte model $US299 ($372), at launch in America. Australian pricing is yet to be released.

Meanwhile, the price of an original eight-gigabyte iPhone 3G will drop to $US99 ($123).

Apple vice president of marketing Phil Schiller told the Worldwide Developers Conference in San Francisco: “The ‘S’ stands for speed, because this is the most powerful iPhone we’ve ever made.

“What is inside is entirely new.”

The iPhone 3GS looks just like the current iPhone, but promises to load messages, games, documents and website more than twice as fast as the current iPhone.

Apple has also improved the iPhone’s widely criticised camera, increasing its resolution from 2-megapixels to 3-megapixels, and adding video capture and an auto-focus mechanism.

Users will be able to focus the camera by tapping objects shown on the iPhone’s screen.

The iPhone 3GS would also be able to respond to voice commands, Mr Schiller said, announcing what song is playing or automatically dialling names saved in its contact list.

Apple’s new phone will also come with a digital compass, a better battery offering up to 9 hours of web surfing or 5 hours of talk time, and will feature new iPhone software offering more than 100 extra features.

The new software will also be available for use on existing iPhone handsets when it is released on June 17. iPod Touch users will also be able to download the software for a fee.

New features include picture messaging, cut and paste for text, a search function for applications including email, and the ability to remotely delete the data from their iPhone if it is stolen.

Senior vice president of iPhone software Scott Forstall said the “Find My iPhone” feature let people use an Apple online Mobile Me service to locate lost or stolen devices.

“It will show you on a map where your phone is,” he said. “You can send it a message and it plays an alert sound whether or not you left it in silent mode.”

The feature also lets people remotely erase all data from lost or stolen iPhones, then reload the information using iTunes if they are reacquainted with their devices.

New Apple 3 GS iPhone

SAN FRANCISCO (CBS 5) ― In the last two years, Apple has sold 40 million iPhones and iPod touches. And it’s not just Apple that’s cashing in. Entrepreneurs are finding a way to capitalize on Apple’s success.

At the Apple Worldwide Developers Conference in San Francisco there is a sold out crowd of 5,000. In the sea of developers, Derek Burgess and Khang Toh from Pittsburgh, Pa., who were both recently laid off, pitch a game they created for the iPhone.

“Smackbots is a robot fighting game and you just fight and have crazy fun. It’s speedy and mindless. We’re selling it for 99 cents and there will be content upgrades for 99 cents. We have more game ideas. We hope to make a company out of this,” Toh said. They invested about $2,000 of their own money and are currently in talks with interested investors.

Mark Hughes doesn’t need investors. He quit his job as a java web developer and has almost matched his old 6-figure salary developing 2 iPhone video games, Perilar and Castles, in the past year. Individuals and large companies are jumping in to get a piece of the pie and Apple makes it easy.

“Apple has taken the work out of it. I don’t have to run my own store. They do my credit processing and refunds. They handle the business side of it,” he said.

And it’s why CNET’s Brian Tong said the Apple economy is booming during this recession. He said, “The barrier of entries are so small, Joe Schmo in his garage with 200 bucks and a whole lot of time can make 100s of thousands of dollars and that’s why there’s an energy for people to be part of this whole thing.”

Not all of the iPhone applications are money makers. But, there are 50,000 applications now available in the Apple store. With more than a billion downloads, Apple takes about a 30 percent cut of the ones that are making money. And the two guys with Smackbots are proud to announce they are among that group making money. Smashbots was just released on the eve of the WWDC.

The good thing for consumers is, prices should stay low, because there will be more competition. Palm, Microsoft, and Nokia are all building application stores to go with phones running their own operating systems.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

Palm handset beat 8Gb iPhone in cost of goods

Rick Merritt
EE Times
(06/08/2009 7:00 PM EDT)

SAN JOSE, Calif. — Apple Inc. leapfrogged the Palm Pre with the announcement of its iPhone 3GS Monday (June and undercut the Pre by dropping existing iPhone prices to $99. Palm, however, undercut Apple slightly in the cost of hardware in handsets with 8 Gbytes flash.

The new iPhone 3GS uses an upgraded application processor, baseband and more NAND flash memory to deliver new media capabilities at $199 for a 16 Gbyte model. That’s the same price—figuring in a $100 rebate–as the Pre released Saturday (June 6) with 8 Gbytes flash.

Teardown specialist Portelligent (Austin) estimates the cost of goods of the Pre at just under $160. That compared favorably with the existing iPhone 3G with 8 Gbytes flash that Portelligent pegged at $173.

By comparison the HTC Dream—the first phone to use the Google Android software—cost $143 in hardware to build but had less than 256 Mbytes of flash, according to Portelligent, a division of TechInsights which publishes EE Times.

Details of the Pre teardown including photographs of its internals were released on June 7.

Initial reports said lines of consumers looking to buy the Pre at retail shops over the weekend were significantly lower than those for the first two generations of iPhones.

The new iPhone 3GS now supports HSDPA networks with downloads of speeds up to 7.2 Mbits/second, implying a new baseband processor. It also sports new video, graphics and audio capabilities, implying a significantly upgraded applications processor, said Jeff Brown, principal analyst at Portelligent.

The 3GS can record video at 30 frames/second at VGA resolution. Its camera has been upgraded to an autofocus version supporting 3 Mpixel resolutions.

The camera also has built in video editing capabilities and a feature that allows the camera to focus on whatever spot a user touches on the phone’s LCD. The phone also supports limited voice recognition for hands-free operation.

“All these features will require a significantly more powerful apps processor,” said Brown.

The new iPhones use an upgraded version of the Apple operating system announced earlier this year. Apple said it has put more than 50,000 applications for the iPhone in its App Store.

A 32 Gbyte iPhone 3GS costs $299. The new phones will be available June 19, but the lowered price on existing phones begins immediately.

Separately, Apple announced a new version of its computer operating system that has expanded support for multi-threading. The Snow Leopard software will be available as an upgrade in September for $29.