This is part 3 of a multi part review of the iOS 3. read the others here. folders. multitasking.

This is quite possibly the feature with the most impact out of anything Apple announced in recent history. What’s the obvious next step when you’ve got the majority of the smartphone and tablet browsing populace using your closed OS? Show them ads.

On the iPhone it’s easier to read content in a well designed app than it is to use Mobile Safari to browse a web page. Once you’re in an app however you lose all web advertisements, but your attention is still held captive by whatever is going on in the app. This is where iAds come in.

Apple now has its own advertising network and it’s a big one at that. There are nearly 100 million devices that run iOS in the world today and no other non-independent (read: Google, HTC or Microsoft owned) network is allowed to run ads inside iOS apps. All the developer has to do is allow ads and the rest is handled by Apple. Apple will sell the ads and share some percentage of the revenue with the developer.

iAd

The idea here is that iAds could allow developers to keep the prices of their apps low while still making enough money to continue to operate. Assuming the revenue is high enough, iAds could eventually be a significant source of advertising revenue for content providers as well.

If it wanted to Apple could even sell ads in books. It’s not too far fetched to see a contextually relevant iAd popping up while you’re reading something in the iBook reader. And Apple controls the entire platform so there’s no hope for an iAd blocker.

Given Apple’s focus on maintaining user experience I wouldn’t expect the company to sell tacky ads or make iAds too distracting. In fact, out of all of the ad networks out there, I’d trust Apple to have the end user’s experience/interests at heart more than anyone else.

If iAd revenue gets high enough, Apple could eventually drop the price on iPhones in order to get more advertising eyeballs.