Apple Upgrades iPhone, and Maybe the Mobile Ad Business

New phone brings bigger screen, better wireless, Facebook

Since the iPhone’s inception in 2007, the common refrain around smartphones is that they’re a mini computer that fits in your pocket. Yet “mini” not only meant smaller but also weaker and less powerful. Thus each year a new crop of smartphones arrive that are bigger, stronger, faster.

And great as those Olympian devices are for users, the mobile marketing ad world's anchor is Apple’s iPhone, partially because the fragmented Android device market splits marketers’ attentions and partially because the iPhone has a much richer ad ecosystem. So for mobile to significantly advance in marketers’ minds, the iPhone needs to as well. On Wednesday—as in every year—the iPhone did just that.

Most notable to marketers is likely to be the size of the iPhone 5’s screen. At four inches in diagonal, the added half-inch should answer (to an extent) advertisers’ qualms over mobile’s limited real estate. Android has offered four-inch devices for years, but Apple has now given the oversized smartphone its seal of approval.

That move carries surely weight with consumers. Whether marketers, publishers and developers simply view the additional space as room for bigger or more ads will remain to be seen. Apple didn’t offer any updates to its struggling iAds product on Wednesday, so it’s up to the industry to find ways to take advantage of the larger screen.

The new iPhone isn’t the only Apple product sizing up. The company unveiled a new version of its Safari mobile browser that includes full-screen mode. Removing a half-inch or so by hiding the top bar and bottom menu means users shouldn’t feel so crammed when viewing Web pages. And as mobile sites build out more interactive features that replicate a mobile app experience, full-screen mode could underscore that mirroring.

The iPhone 5 is also more powerful and faster than its predecessors, with an improved wireless connection to boot. The combination of a twice-as-fast processor and more robust LTE wireless capability means that iPhone apps and mobile sites can more closely resemble their desktop counterparts because the processor won’t struggle under their size or required bandwidth. In other words, apps won't have to feel like subpar, stripped-down websites.

Apple also showed off Passbook, a mobile wallet-esque app it had debuted back in June. Passbook lets users compile coupons, loyalty cards, movie tickets, boarding passes, game tickets, etc. into one app. The all-in-one aspect of Passbook could lead to more consumers digitizing their loyalty memberships and clipping mobile coupons, and more brands tapping into location-based advertising.

Passbook is also location-aware, which potentially means if someone has a retail coupon stored that coupon will appear on their iPhone’s lock screen when they walk by that retailer’s brick-and-mortar store. And as The New York Times’s Nick Bilton pointed out in June, Passbook is a stepping stone to a full-fledged mobile wallet from Apple, the company that already has access to 435 million consumers’ credit cards via their iTunes accounts.

But it’s not all about Apple. The newest version of the company’s mobile operating system adds Facebook integration. Like the Twitter integration introduced last year, users can now post to Facebook straight from the browser and various other apps, including the notification drop-down.

But really this is Apple’s product, and the company is making sure of that with a new Maps app, which is displacing Google Maps.  Apple did away with building on top of Google’s product and reengineered the map app internally to include turn-by-turn navigation (which Google had only made available to Android devices) and interactive 3D views.

Finally the iPhone 5 has an improved camera that includes Panorama mode and the ability to take pictures while shooting video, so the level of user-generated content should improve as well.

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