A closer look at Apple’s new iPhone tweaks

It turns out most of the advance rumors about new iPhone device and platform capabilities were true, with the notable exception of a 4G iPhone unveiling, which was a ridiculous proposition to begin with. At the iPhone 4.0 developer event today, CEO Steve Jobs announced that Apple (NASDAQ:AAPL) is creating an in-application advertising platform, creating a multiplayer gaming center and introducing long-sought-after functionality to the iPhone operating system, the most significant of which is application multitasking.

Starting with the new updates to the OS, Apple is catching up to its competitors in the smartphone space whose operating systems have allowed for some time for multiple apps to run at once. Google’s (NASDAQ:GOOG) Android and other OSes have used multitasking to put forward features that the iPhone lacked, such as the ability to support background applications or shuffle between apps. To run an iPhone app today a user has to actually open it, making the iPhone a rather static device.

The most obvious scenario is the customer listening to Pandora or some other audio streaming app and being forced to shut down the program before he or she can surf the Web. Less obviously it has prevented developers from creating always-on or background apps that automatically update themselves or maintain a steady link with the network. For instance, when Root Wireless designed its crowdsourcing network testing app, it released it only for Android and Research In Motion’s (NASDAQ:RIMM) BlackBerry OS because the iPhone won’t allow an application to wake itself up to perform its automated tests. Fast Company’s Kit Keaton wrote a detailed explanation of the new limitations and capabilities of multitasking, including the ability to link the phone’s GPS capabilities directly to real-time location-based services like alerts.

The mobile gaming portal, called Game Center, is essentially a new online network and set of social networking APIs that take the increasingly sophisticated and numerous games for the iPhone out of their isolation. The APIs will enable online social gaming, and the network will allow customers to connect with their friends or find new ones. It sounds a lot like what Microsoft (NASDAQ:MSFT) is doing with Xbox Live, scaled down to the smartphone level. For a good analysis of why Game Center presents an enormous threat to the Nintendo DS and other gaming platforms read Matt Peckham’s blog posting at PCWorld.

Finally, if Apple didn’t have enough revenue streams from the iPhone — the retailing of the devices themselves, a percentage of application sales and presumably a cut of AT&T (NYSE:T) and other operators' monthly data revenues—it just added another one. iAd creates an add distribution network, which allows developers to embed display advertising directly into their apps. According to Jobs, the network could generate 1 billion impressions a day based on current usage of iPhone apps today.

But this might not be any old banner or text advertising platform. By embedding ad placement directly into the app code, Apple may be able to create a much richer mobile ad experience than what’s out there on the mobile Internet. According to Slate’s Big Money Blog, this new ad work not only sets up a big showdown between Apple and Google over mobile advertising, but probably clears the way for Google to complete its acquisition of AdMob.