iPhone 4's Killer App? Video Calling

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Note: New Apple smartphone's FaceTime tool could send it flying off the shelves, analyst says.

iPhone 4's built-in video conferencing platform could be the application that sets it apart from the competition and drives sales, according to at least one market watcher.

The phone's FaceTime feature, which facilitates voice-and-video calling among iPhone 4 users, "is the most telling announcement ... on how Apple continues to drive innovation," said Gartner analyst Carolina Milanesi.

"It is taking something that has been around for years and that never took off and makes it easy, fun, but most of all turns it into something that can make a difference in your life," said Milanesi.

Milanesi, however, conceded that FaceTime isn't perfect. Aside from the fact that it only works iPhone 4-to-iPhone 4, Apple only enabled the technology for use on Wi-Fi networks in order to spare AT&T's overtaxed 3G cellular system. "Wi-Fi-only is a limitation," said Milanesi, in a blog post.

But even that has its upside, she said. Wi-Fi makes FaceTime "non-dependent on operators, their network performance, and pricing decisions, which is a big plus," said Milanesi.

Still, Apple isn't the only tech purveyor to introduce a video conferencing-enabled smartphone this month. Sprint and HTC last week unveiled the Evo, a 4G phone that offers voice-and-video chat through an application called QIK.

iPhone 4 features a number of enhancements over its predecessor, the iPhone 3GS, including higher screen resolution (960 x 640 pixel technology called Retina Display), a front-facing camera, and a longer lasting battery that affords 40% more talk time. It's also 24% thinner.

iPhone 4 also includes a 3-axis gyro and a sleek new glass and stainless steel case. "iPhone 4 is the biggest leap since the original iPhone," said Apple CEO Steve Jobs, as he launched the device Monday at the company's Worldwide Developers Conference in San Francisco.

The new phone is priced at $199 for the 16GB model, and $299 for the 32GB model, based on a two-year AT&T contract. iPhone 4 is available starting June 24 in the U.S., France, Germany, Japan, and the U.K. The preorder period begins June 15.