Steve Jobs, Apple chief executive, unveiled a fourth-generation iPhone capable of video calls with a new front-facing camera, a much sharper display and a host of other features.
The handset will go on sale in five countries on June 24 and spread to more than 80 additional nations by the end of the year.
The integrated video-call function was the most dramatic of a series of innovations that analysts said put Apple back ahead of competitors relying on Google’s Android operating system for mobiles.
But the feature’s introduction also underscored a tension between smartphone users and wireless carriers. AT&T, the second-largest telecom and Apple’s exclusive provider in the US, last week said it would stop offering unlimited data transmission for a set price.
In a speech at Apple’s conference for programmers, Mr Jobs said the video calls would only work with Wifi connections, at least this year, and only between iPhone 4s.
“We need to work a little bit with the cellular providers” before the service will work over the ubiquitous cell networks, he said.
Many of the other improvements were less surprising in the wake of a product leak that is now the subject of a criminal investigation. An Apple employee testing the device left it at a Silicon Valley bar and it was subsequently sold to a technology blog that disassembled and reviewed it.
As expected, the iPhone 4 features a much sharper display than the iPhone 3GS, including four times as many pixels, or about three-quarters of the number in the far larger iPad tablet computer’s display.
The new model includes high-definition video recording capability, along with editing features in a new iMovie application for the iPhone.
For gaming, the glass- and steel-encased phone adds a gyroscope to the accelerometer, which will allow much more comprehensive motion recognition.
After years of requests, the iPhone 4 finally provides broad multitasking, so that users can browse the Web and send messages while listening to music, and a folder system for making applications, known as apps, easier to find.
The App Store for the iPod touch, iPhone and the recently launched iPad has been the key to the rapid adoption of those devices, as software writers rushed to get their programmes before a growing audience. As of last week, more than 5bn apps had been downloaded, most of them free.
Apple faces increasing competition, as tablet rivals to the iPad emerge and Android handsets gain popularity.
Mr Jobs felt called upon to defend Apple’s lead, citing new Nielsen figures that give Apple 28 per cent of the US smartphone market, versus 9 per cent for Android.
In a further bid for developer loyalty, Mr Jobs said the company, which keeps 30 per cent of revenue from apps, had passed $1bn to outside vendors and that the company approves 95 per cent of proposed apps within seven days of submission.
In another swipe at search advertising leader Google, Apple’s new iAd network will be built into the operating system – renamed iOS4 – and will show banner adverts to users without taking them out of the apps. If they tap on the banners, users can see high-quality video and interact before returning to the app, whose writers will get 60 per cent of the advertising proceeds.
In two months Mr Jobs said Apple had sold $60m worth of advertising, a significant chunk of the market for display adverts on mobile devices.
Buyers can choose demographic groups by picking the apps they want as their vehicles. Unilever, one of many big companies who have signed up, said it will use athletes in videos within sports apps to reach men for its Dove brand of moisturisers.
Updating the crowd about the success of the iPad, Mr Jobs said the 8,500 iPad-specific apps had been downloaded a total of 35m times, or 17 per iPad. The Apple chief said 5m electronic books had been downloaded to date, giving the format 22 per cent of the US market for digital books.
Additional reporting by Tim Bradhsaw in London