Apple on Tuesday unveiled the next version of the operating system that powers the iPhone, dubbed version 3.0, at an invite-only event at Apple's headquarters in Cupertino, California. It will be available for developers beginning today, and to everyone else "this summer" (mid-year for Australians). It's a free upgrade for iPhone users; those who own the iPod Touch will again have to pay for the upgrade (Apple is charging US$9.95).

Here's a quick recap of what was announced:

System-wide search
Apple has integrated its Spotlight search technology across the entire device. This will let users search for specific email messages, applications, contacts and any other data from within those applications in one place. Users get to it from a new menu that's to the left of their first home screen. Swiping to the left brings up an open search box that brings in results as you type, similar to Spotlight search on Mac OS X.

You can now copy and paste text from one app to another. (Credit: James Martin/CNET)

Copy and paste for text, photos and SMS
One of the most-wanted features, the ability to copy and paste text will be making its way to OS 3.0. Users will be able to select sections of text and take them to other applications. This is one of the new APIs that Apple is releasing to developers.

To copy text, simply double-tap the screen, and it pulls up an option to cut, copy and paste. Then simply drag a start point, and an end point, over the text you want, and then double-tap again. The phone will save the text in a clipboard, from which it can be taken elsewhere. You can also grab entire sections of text using a large rectangle that can be moved around to include paragraphs at a time.

Additionally, copy and paste will work with photos and SMS messages. For instance, if you feel like selecting multiple photos to send in an email you can now select the ones you want, then send them together in one message. Previously you had to select them one at a time — through the Photos application, over to mail. The same goes for SMS messages too, so if you feel like relaying a text message to another contact you can simply forward it.

MMS
You can now send and receive multimedia messages (MMS). This means text messages can be sent with photos and voice recordings, all without using the built-in mail application to do it. Missing, however, is any kind of video support, which is an MMS feature found on many other phones with built-in cameras.

Push notifications
The feature that was supposed to appear in September of last year will finally be making its way to phones in version 3.0. Scott Forstall, the head of iPhone software development, noted that Apple had been late on this, and blamed the delay on scaling, saying that the original system was too taxing on both the handset's battery and its processing power.

The new system works just like the old one, but has been optimised for over-the-air data transfer. It still relies on Apple's servers as a go-between to send audio alerts, text messages and badge notifications. Users still have to fire up the application to get at the data though.

Apps will now charge for additional service levels as in this upcoming Sims game from EA.
(Credit: James Martin/CNET)

In-app micro-payments
Apple has built in a new system for developers to charge users after they've purchased an application. Previously there was no way to do this, forcing developers to hike up the initial price, or use external payment systems, similar to what Amazon did with its Kindle application.

Apple's new system, dubbed "In-App Purchase" lets developers create an application where extra content can be purchased from within it to expand what it can do. All the billing is handled by Apple, and goes through the user's iTunes store account.

This same system has been used in console games like Rock Band and Guitar Hero with extra music track purchases. On the iPhone this was demoed on the upcoming EA title The Sims 3, which will let users buy items for their virtual character using an in-game store interface.

This payment system is only for paid apps, meaning free applications cannot be upgraded to a paid premium version. Apple is also using the same revenue model for per-app purchases, meaning developers can charge whatever they want, and keep 70 per cent.

Better GPS baked into apps
Apple announced that Core Location would now be available for developers to build into their applications, meaning they'll be able to include turn-by-turn directions into their apps. However, they won't be able to build it off the iPhone's Google Maps application. Apple says this is due to licensing issues. Though, map providers may step up and start selling mapping data to iPhone developers.

P2P networking and hardware communication
No longer will handsets exist as single entities. A new system, built off Apple's Bonjour technology, will let devices talk to each other. This would let people play multiplayer games with one another, and potentially exchange data files — all without the need to be connected to a third-party server or a central Wi-Fi hub. To do this Apple is using the iPhone's built-in Bluetooth antenna.

Apple is also opening up how much control accessory makers can have over external hardware. Forstall showed how the iPhone would be able to hunt for FM radio signals using an attached dongle, and even read a patient's blood pressure — putting the controls on the iPhone instead of the attached device. This is very similar to the partnership that Apple has with Nike and its Nike+ running attachment, which could be controlled using an iPod. This new system works both from the dock connector and over Bluetooth.

To demo this new level of communication, a Johnson & Johnson company, LifeScan, went on-stage to show off a new blood sugar application that uses the phone to process what a user's blood glucose level is and keep track of it both on the device, and by sending the data to LifeScan's servers.