Editor’s note: Adam Leach and Tim Renowden are analysts at Ovum, which is part of the international business and technology analysis firm

By Adam Leach and Tim Renowden, special to LTW

NEW YORK, N.Y. – The new is a continuation of Apple’s (Nasdaq: AAPL) existing strategic direction, representing a solid refresh of the product’s features and capabilities packaged in typically excellent Apple industrial design, but with few surprises.

Key improvements to the processor, camera, and screen are all there, along with a refreshed software platform (rebranded as iOS). Apple is also attempting to revive video calling through its FaceTime app, which carriers will be watching closely.

iPhone is still the smartphone benchmark.

In three years the iPhone has become the industry benchmark for high-end smartphones, and the fourth-generation device will only reinforce this view.

The success of the iPhone is down to a number of interrelated factors.

Apple created a device with a genuinely unique user experience, one that consumers still find engaging and easy to use.

Second, Apple wrapped this user experience in great industrial design.

Third, the company created an end-to-end platform that integrates Apple’s own services (e.g. iTunes) as well as third-party services onto the device (through the hugely successful App Store).

But perhaps more important subsequently has been Apple’s ability to build and motivate a large and active developer community that produces content, in the form of apps, exclusively for the device. This ecosystem of developers and the value they bring to the platform, as well as to consumers, is the hardest aspect of the iPhone proposition for other companies to replicate, especially given the reluctance of developers to support multiple software platforms.

An incremental refresh takes the iPhone back to the high end, but Android’s appeal is growing

The new handset’s specifications bring it back to near the top of the smartphone pile, but not beyond. Ovum’s Smartphone capability analyzer shows there are already several handsets in the market with higher specifications than iPhone 4. The new version of the software platform (now renamed iOS) is similarly steady, with a range of incremental improvements to the user experience but no radical change of direction.

However, the iPhone 4 faces much stiffer competition than its predecessors. The rise of Google Android over the last two years has been phenomenal and is allowing manufacturers to create appealing alternatives to the iPhone; critically at cheaper prices. These handsets are more than just iPhone clones.

The risk to Apple is that these devices offer greater freedom with available content and may prove more appealing (if they offer the right user and developer experience) than a device with Apple-approved content only. This may ultimately be what puts the brakes on unlimited iPhone growth.

Can Apple bring video calling to the mass market?

FaceTime provides the iPhone 4 with the capability to make video calls. FaceTime will initially be limited to Wi-Fi and won’t allow users to make video calls over a cellular network, although this capability is on its way.

Video calling was hailed as the “killer app” for 3G networks but failed to take off. This failure was due to limited bandwidth in the network but above all a lack of consumer enthusiasm. However, Apple has a track record of successfully popularizing pre-existing technology and it could do for video calling what it did for digital music players and mobile applications.

If Apple achieves this for video calling it will provide an opportunity for carriers to increase revenues from data and test the viability for video calling on 4G networks. Carriers can achieve this in two ways. First, work with Apple directly to bring cellular-enabled video calling to the iPhone. Second, work with other manufacturers to bring their own services to market while FaceTime remains restricted to Wi-Fi only.

However, carriers need to have sufficient available bandwidth to ensure consumer expectations are met. This may prove difficult for some carriers with old networks that are already over-burdened and struggling to meet demand from existing smartphones and mobile broadband devices

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