By Brian X. Chen

The next upgrade to Apple's iPhone will have a strong focus on gaming, analysts and developers agree.
That's because the gaming market is an increasingly juicy segment of the mobile multimedia space — and it's one that Apple's phenomenally successful iPhone is well-positioned to dominate.

"The iPhone and iPod Touch are becoming a major new handheld gaming platform, and if you look at the App Store and look at what's doing well, that's reflecting," said Bart Decrem, CEO of Tapulous, developer of the popular Tap Tap Revenge iPhone game. "I would look forward to improvements in the device as a gaming platform both for the phone and iPod Touch."

Apple made clear its plans to seize the gaming market in November 2008 when Apple marketing executive Greg Joswiak called the iPhone and iPod Touch "the future of gameplay," posing a serious threat to dedicated gaming consoles such as the Nintendo DS and Sony PSP. The reasons? A few things: The quick, electronic distribution method of games and apps via the iPhone's App Store; the accelerometer and multitouch display, which are introducing new approaches to gameplay; and the iPhone's lighter, more portable form factor compared to its rivals.

Numbers say the iPhone is indeed in a position to assault the gaming market. Analysts predict Apple is on track to sell 40 million iPhones or more per year. By way of comparison, Nintendo sold 42 million DS consoles from January 2007 to June 2008.
Add to that the fact that the iPhone App Store has already got the DS and PSP beat in terms of game titles available: When the App Store was just three months old, it had 1,500 games; the PSP and DS had about 600 and 300 titles, respectively.

There are just a few weaknesses the iPhone needs to address before it's truly acknowledged as a serious game device, said Steve Demeter, developer of the Trism iPhone game: Processing limitations, graphic capabilities and memory management. For example, the PSP's advantage as a dedicated gaming device is that its application programming interface (API) is geared toward loading complex textures — a task the iPhone falls short on.

If Apple is serious about making the iPhone a gaming platform, it's a good bet that the next upgrade to the iPhone will address those limitations.
Tero Kuittinen, a Global Crown Capital analyst, agrees that the next iPhone will have enhanced graphics and more powerful processing capabilities. And those improvements will likely be incorporated in a new ARM chip that Apple is developing in-house. In April 2008, Apple acquired semiconductor company PA Semi to manufacture ARM chips for future iPhones.

Other than introducing graphical improvements it's unlikely the iPhone will see dramatic changes. Kuittinen noted that Apple enjoys keeping its interfaces consistent to ensure software is backward-compatible — so forget about a slide-out keyboard or a screen that's either much smaller or much larger than the current iPhone. Developers Decrem and Demeter agreed that Apple will likely be conservative with changes so as not to require software coders to rewrite applications to be compatible with the next iPhone.

One minor change Apple will likely introduce in the third-generation iPhone is an improved web camera with video-recording capability and a flash. Kuittinen said the camera will have to sport at least a 3.5-megapixel resolution in order to compete with Research In Motion, Samsung, HTC and LG, which are already selling handsets with superior cameras to the iPhone.

When can we expect the next iPhone? Considering the first iPhone launched June 2007 and the second iPhone shipped July 2008, the third-generation iPhone should land no later than summer 2009.
Let's hope this one has copy and paste.