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Ever since Epic Games first demonstrated the Unreal Engine 3 running on the iPhone 3Gs last year, we’ve been wondering just what the creators of Gears of War and the Unreal Tournament series had in store for us when they finally turned their attentions to the App Store.

Yesterday, at Apple’s annual September iPod Event, Epic gave us our first taste of what’s to come: Epic Citadel, a free and utterly gorgeous next-gen app that works as an interactive technology demo of Unreal Engine 3 running on iOS.

The 82.2MB tech demo doesn’t include any real gameplay, per se, but as a demonstration of what iOS is capable of — particularly on the A4 CPU — it utterly breathtaking, offering a fully-realized medieval town to explore. I imagine Epic won’t be able to crank so much detail out of their engine once the bullets and bodies start flying — and they will — but even so, this is astonishing. We are looking at Xbox 360 or PlayStation 3 caliber graphics here… on a device that fits in the pocket.

We didn’t think anything could look better than id software’s recent demo of the Rage engine running on the iPhone 4, but Epic’s one-upped Carmack.

Apple has released  the Gold Master version of iOS 4.1 to developers barely more than four weeks after the release of iOS 4.1 Beta 3. There have been a plethora of problems reported with iOS 4.0 and its incremental updates, but according to Steve Jobs today the following issues will be addressed in this new iOS release:

• Proximity sensor
• Bluetooth issues (muffled audio/connectivity)
• Slow performance issues on the iPhone 3G

There is no word on whether or not the update addresses the complaints about yellow tinged photos when using the rear camera on the iPhone 4.

Registered iOS developers can grab a copy of the new beta at developer.apple.com/iphone. The rest of you will have to wait until next week.

Steve Jobs launched an insta-meme today by suggesting in his keynote that Apple’s new multi-touch iPod nano could be worn as a wristwatch.

The meme becomes a fad next week when the nano arrives in stores and people start actually wearing them on wrists. It’s going to happen, especially when third-party companies begin offering special-purpose wristwatch straps for it. I know it’s going to happen because I’m going to do it.

Talk is cheap, but a Huffington Post poll at post time was running over 67% in favor of wearing the iPod nano as a wristwatch.

But serving as Apple’s first-ever foray into the wristwatch racket isn’t what’s ground-breaking about the device.

We’d previously heard reports that the next version of iTunes might eschew streaming media for social networking. Those rumors were right. Meet Ping. It’s like iTunes and Twitter and Last.FM collided together.

“One of the biggest things we focused on with iTunes is discovery. With over 12m songs, how do you find out about new stuff? People are always asking what are my friends listening to, what are my favorite artists up to? There’s not a great way to do that, there must be a better way,” says Jobs.

That’s what Ping is for. It’s a social network based around music: the convergence of the philosophies behind Twitter and Face with iTunes.

Once you click on Ping, you see the recent activity of the friends and artists you are following, which shows you the music they are listening to and endorsing. You can even be alerted to concerts.

Apple acknowledged privacy concerns about Ping, noting that you can selectively allow people to follow you, and even set yourself to be invisible. Given my embarrassing library of Brittany Spears tracks, thats a relief.

Ping will be available to up to 160 million iTunes users in over 23 countries, starting today. Anyone else think that’s a fantastic name?

[Image via GDGT]

As we’ve long suspected from the beta iOS SDKs, Apple has just announced that they will be releasing iOS 4.1 today.

What’s new? The proximity sensors have been fixed, against earlier reports. Bluetooth is fixed, as well as the iPhone 3G slowness issues.

There’s also now baked-in support for HDR photos.

“Let’s start off with HDR photos, what are they? A lot of times when you take a photo, it’s blown out with bright light. Now, when you turn on HDR, it takes 3 photos in rapid succession: one normal, one under exposed, and one under exposed. It combines the three with some pretty sophisticated algorithms…” says Jobs.

Even better, you now get HD video upload over WiFi, obviating recent apps that got around the iOS’ compression issues.

Game Center is also finally coming to iOS, after being teased since the iPhone 4’s debut. Your iPhone just got its Xbox Live.

[Image via GDGT]

ABC Disney and Fox have given Apple a ‘go’ signal on a plan to sell 99-cent episodes via iTunes. However, the agreement is limited and is being labeled as “experimental.” The limited agreement is expected to be announced Wednesday, alongside a redesigned $99 Apple TV as part of a media event called by the Cupertino, Calif. company.

The Wall Street Journal, citing “people familiar with the matter,” reports Fox has agreed to offer Apple shows it “both produces and airs,” including series such as “Bones” and “Glee.” The limitation is in light of concern some networks have expressed that the 99-cent pact could hurt lucrative re-run agreements.

What with the contentious relationship between Intel and Apple, you’d think Apple CEO Steve Jobs wouldn’t be pleased about the chip giant acquiring Infineon’s wireless business, the firm that supplies baseband chips for the iPhone. However, Intel’s CEO says Jobs was overjoyed at the news.

“Steve was very happy,” Intel CEO Paul Otellini said in a Fox Business TV interview. There were a number of companies competing for [Infineon’s wireless unit]. I think they [Apple] are very happy Intel won the bid.” Tuesday we reported Intel acquired Infineon for $1.4 billion.

Here’s a rumor that has my heart leaping in my chest: later today, Apple intends to offer the option of 3G with their fourth-gen iPod Touches.

According to the rumor, the new iPod Touches would have the option of 3G, similar to the iPad. For users willing to pay a hundred dollars more for their Touch, it would come with a built-in tray for a 3G micro-SIM.

I can’t tell you how onboard with this rumor I am. While I’ve debated whether or not a retina display and FaceTime would be enough to get me to upgrade my third-gen iPod Touch, the addition of 3G to the fourth-gen would be enough for me to dump my iPhone for good. Who needs it when you’ve got 3G, a multitasking operating system like iOS 4 and a SkypeOut account?

We’re only four hours away from knowing the truth. Right now, I’d say that I think 3G is on the iPod Touch roadmap eventually, but perhaps not today. I think a lot will rest on whether or not the next iPod Touch gains any thickness. It looks like Apple already intends on cramming two cameras into the iPod Touch, which is already a miraculous spatial trick: getting a 3G radio in there without increasing the device footprint would be a design miracle.

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Got an old lamp-style iMac sitting dusty and unused since you first swooned over it back in 2003? Gut it, install a Larson Scanner Kit into the base and plop it on your head and you’re ready to attend your next Halloween party as… well.. take your pick? iMaCylon? Cyclops from the OS X-Men?

[via Technabob]

We start the day off with three hardware deals: the first is a 22-inch iMac powered by an Intel core i3 running at 3.06GHz for $1,049. Or, for the same amount, you can grab a MacBook Pro laptop. Finally, if you are seeking more horsepower, how about an 8-core Mac Pro Workstation with 16GB of memory for $3,879?

Along the way, we’ll also check out the latest crop of iPhone app freebies, as well as more cases for your Apple handset. As always, details on these and many more items can be found at CoM’s “Daily Deals” page after the jump.