iPhone OS: Multitasking & iAd are huge updates

Yesterday, Apple hosted a developer preview for iPhone OS 4. They went through what they called "7 tent poles" of OS 4. Of the 7, I think 2 are very significant:

• Multitasking
• iAd

In fact, one of Android's strongest features is multitasking. Palm Pre also tried to play off on their ability to multitask. Of course, the problem here is that you need a more powerful device to multitask and running apps in the background can cause significant performance problems and power usage reduce battery life.

Apple has worked hard to figure out how to provide multitasking and avoid both low performance and reduced battery life. And they way they did it: they don't let apps run in the background, even though they provide multitasking.

Huh? How does that work? Well, Apple will ship in OS 4 a number of programming interfaces that allow apps to do very specific types of multitasking without the whole app running in the background.

For instance, take Pandora's extremely popular Internet Radio app. Before OS 4, you can't run that app to listen to your custom radio stations and do any other thing on your phone. With OS 4, you will be able to. But the entire app doesn't really continue to run in the background. Instead, developers will have to use one of the multitasking API's Apple is providing - specifically the one for streaming music.

In all, Apple has identified 7 types of multitasking:

1. background audio (like Pandora)
2. voice over IP (stay on a Skype call)
3. background location (Navigon or Loopt)
4. push notification
5. local notification
6. task finishing
7. fast app switching

Apple claims that by using the appropriate type of multitasking, and handing the responsibility for implementing it to the OS, performance and battery life are preserved.

iAd
While the details are still a little vague, Apple demoed and described a new OS-integrated advertising framework. When I first heard that Apple was getting into the mobile advertising business, it didn't make much sense to me.

But Steve Jobs made it quite clear in his presentation, and now that I heard his remarks, it make perfect sense, and in my opinion is quite a significant development.

First off, he said his reasons are two fold:

In order to keep the prices of apps low (free or 99 cents) developers need to find another way to monetize their development efforts - and many have turned to in-app advertising.

In his words, the current state of in-app advertising "sucks".

Why would Apple care to keep app prices low and improve the quality of advertising on their devices? Simple - the iPhone's killer app is the App Store. People love their phone because of all the stuff you can do with it. And the way the iPhone lets users do all of that stuff. Better apps = better device.

Also, to some extent, retention is based on consumer investment in apps. Even if somebody else started shipping a phone with as good a user experience as the iPhone, it would be hard for me to switch because I've got such a heavy investment in apps.

That's the reason a lot of Windows users give for not switching to Macs. I'd have to buy $3,000 worth of software all over again. Apple's learned from that and is applying those lessons to the iPhone.

Let's say that a developer has versions of its app for iPhone, Android, Blackberry and Pre. The iPhone already has 80 million devices in use. The developer is going to want to include iAds in their app because they are going to get the best ad experience for users this way and because the market is so big.

But they can't use iAd on the other platforms. So they use something other advertising framework - adMob for instance. If, as expected, the click rate on iAds is higher, and the number of devices in use is higher, that is going to lead to significantly more revenue from the iPhone version of the app than all the other platforms combined.

The logical conclusion to this line of reasoning is that the developer can make available their app for iPhone users at a significantly lower price point - $1-$2 or even free, and still earn plenty from their app.

Let's do a little simple math. We know that there are already 80 million iPhone OS devices in the world. Let's make some assumptions, just for run:

• a developer writes a free app that gets a 1% download rate.
• one in four of those users taps just 1 app in any given day
• the average pay per click is $.01

Taking into account Apple's 40% tax on iAd, the developer would earn $438,000 from that free app in a year.