Apple's new iPhone: It's all about the software

Apple will unveil a new iPhone as a shiny new object, but software will carry the device forward.

Apple will take the wraps off its new iPhone Tuesday, but the launch really boils down to one word: Software.

Sure, we'll ponder the importance of an 8 megapixel camera, try and figure out key design decisions and potentially drool over the iPhone. The reality is that the iPhone is just a vessel for Apple's software and app ecosystem.

Simply put, the iPhone can tackle emerging markets, be an incremental upgrade or even tackle 4G networks. In the end, everything boils down to iOS 5 and iCloud.

Among the key items from the Apple rumor mill:

  • Apple will roll out an Assistant feature that integrates voice technology throughout the phone. If this software works out, Apple's iPhone will be more like a Star Trek tricorder.
  • iCloud will tie Apple's ecosystem together without the PC as a hub.
  • The new iPhone most likely won't be 4G capable.
  • Sprint is plunking down billions of dollars to bet on the iPhone.

Add it up though and software is the big thing.

Later today: 1 p.m. EDT, 10 a.m. PDT: ZDNet live color commentary on Apple's iPhone unveiling

Barclays Capital Ben Reitzes said:

We believe that the potential new model in 2011 will feature a faster processor, more DRAM, an upgraded 8MP camera and be optimized for use with the new iOS 5 with better multi-tasking. One of the major benefits of this new product could be expanded carrier relationships in the US and elsewhere, given the Qualcomm baseband. We also believe that a new iPhone can sell in China and other parts of Asia as early as December, significantly helping sales. We expect software to be the big focus of this announcement as Apple is set to release iOS5 including iMessage and other key enhancements. We are upbeat about the prospects for new voice recognition software, as Apple could work in features from its purchase of Siri last year. The feature could include a new interface that helps access a whole new range of commands that increase convenience and integrate more social networking options. We continue to believe that Apple’s software and its integration into specific hardware is its unique advantage over peers.

Apple's software as well as its app ecosystem is what gives the iPhone and iPad their stickiness with users. Bottom line: It's likely that the new iPhone will provide folks with a shiny new object, but in the end features like Assistant and social integration will drive sales.