Face-to-face chat leads a host of video tools on new iPhone 4

Despite network glitches during his anticipated demonstration, Steve Jobs on Monday introduced a new iPhone that includes a larger and longer-lasting battery, a camera system that records HD video and a new calling feature called FaceTime that allows for video chats, thanks to a new front-facing camera on the new iPhone. Jobs also announced a partnership with long-time nemesis Microsoft, as the Bing search engine will be included on the new iPhone.

Apple to release iPhone 4 on June 24

The new phone is called the iPhone 4, and it will go on sale June 24th. Available in white or black, a 16gb will be offered for $199 while a 32gb model will sell for $299. The existing 8gb iPhone 3Gs will go on sale for $99.

As part of a nearly 2-hour demonstration, Jobs showed off an upgraded operating system that the new iPhone will work on. Owners of existing iPhones and the iPod touch will be able to download the new OS for free as well starting on June 21. Jobs cautioned that owners of the 3G iPhone will not be able to use all features of the upgraded operating system, which now has the small ‘i’ in front of the name. It’s officially called the iOS 4 (take that, spell checker!).

The iPhone 4 is the thinnest iPhone to date and looks just like the model that tech site Gizmodo got its hands on, which Jobs acknowledged during his demo.

“I don’t know if you’re ever seen this,” he noted with obvious sarcasm and to big cheers in the San Francisco auditorium that housed the event. The iPhone 4’s physical features include squared sides (it looks like a rectangle), a front-facing camera, a micro-SIM tray, and 5-megapixel camera with an LED flash on the back. Jobs said the new iPhone is 24 percent thinner than than the iPhone 3Gs, and “as a matter of fact, it is the thinnest smartphone on the planet.”

(Editor’s note: The quotes used in this story were culled from Engadget’s live blog of the event.)

Speaking of which, connections did not go smoothly for Jobs during the demonstration. At one point during a comparison showing the iPhone 4’s improved retina display, the network connection for the iPhone 4 was lost. Jobs appeared “pissed,” noted several observers at the convention center. When he yelled backstage for assistance, asking if “you got any suggestions?” an audience member yelled out, “Verizon.”

That was the only mention of the nation’s biggest wireless carrier. There were rumors of a new carrier agreement with Verizon to be announced Monday, but that did not materialize.

The retina display feature improves the screen clarity on the phone. According to Jobs, the human retina can process 300 pixels per inch while the iPhone offers 326 pixels per inch. The result is a sharper screen demonstration, which Jobs was able to display despite the glitch.

The video features of the iPhone 4 were the most impressive. The front-facing camera will be used for a new video chat feature called FaceTime. Initially, FaceTime will work only over Wi-Fi and iPhone 4 to iPhone 4. The audience was impressed by these features, as there was much applause after Jobs showed a commercial that allowed two people to use FaceTime to communicate with sign language.

The iPhone 4 can also shoot video in HD format, at 720 resolution and 30 frames per second. To go with that new feature, Jobs introduced an iMovie app ($4.99) that allows for one-touch on the spot video editing. Just like in the Mac version, users will be able to drop in still photos among the video — and create a  “Ken Burns” effect — to make compelling videos on the fly. A geolocation feature can be added as well.

Other iPhone 4 features include a gyroscope to improve the hand-held computer’s gaming capabilities.

The new features in the iPhone 4’s operating system include the ability to have several apps open and working at the same time, a feature called multitasking. Also, users can drag apps into specific folders, have a more unified email experience with “threading,” a feature that aggregates all the conversations tied to an email exchange.

As for Microsoft, the long-time Apple rival, Jobs was “pleased” to add Bing to the Google and Yahoo search engines available on the iPhone 4. “Microsoft has done a great job on this,” Jobs said. Also, he hinted that the iOS 4 will offer enterprise users better “data protection, device management and multiple Exchange accounts.”

At the end of his demonstration, Jobs was his usual melodramatic self, noting that the feature rich iPhone 4 “will change everything… all over again.”

Further, Jobs noted that Apple is “not just a tech company. Apple is more than that. It’s tech and humanity. It’s the hardware and the software working together. It’s not just a great new camera system, it’s the editing tool, it’s not just a front-facing camera, it’s that plus 18 months of work on the software side. It’s the complete solution, so all of us don’t have to be system integrators.”

While many of these features look cool and will certainly be a lure to upgrade, Jobs did not deliver many surprises. Several of the new iPhone’s features had been rumored or expected, as Apple unveiled the iOS 4 road map earlier this year.

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