Tomorrow, Apple escalates the smart-phone war by releasing its iPhone 3G S. The phone runs twice as fast as the current iPhone 3G and will feature video recording and editing-amongst other features [those other features can be downloaded for free onto all iPhone 3Gs as well]. Anticipation of the 3G S is so high that Apple has decided to open its store doors tomorrow at 7 am. Earlier than the previously announced early opening.

The release of the new iPhone raises the stakes for all smart-phone makers. Apple once again revolutionized an industry through the iPhone. After changing the face of computing with the Macintosh and of portable music with the iPod, the iPhone has set the standard of how a smart-phone should look like. The iPhone was the first full-touch-screen phone. Now all smart-phones are expected to have this features.

Blackberry has revamped its model to compete with Apple and so has Palm. Apple not long ago replaced R.I.M., the Canadian firm behind the Blackberry, as the number one phone for businessmen. Blackberry has invested in an effort to regain its status. But it is Palm that has done the most and will likely pose the greatest challenge to Apple’s new found dominance.

Palm was previously the industry leader in smart-phones, but feel behind the Blackberry and even more so the iPhone as Palm failed to deliver, well, smart phones with easy-to-use features and a slick design. But as The Economist reports:

Two years ago the company took the bold step of rebuilding its software-engineering team almost from scratch, importing fresh talent from rivals including Apple. (An ex-Apple manager was appointed chief executive on June 10th.) It then scrapped its antediluvian operating system and developed an entirely new one that has won plaudits from reviewers. The Pre, which uses the new software, is intended to be as user-friendly as the iPhone.

The Pre is Palm’s answer to the iPhone and the most-talked about smart-phone after the iPhone. The smart-phone market is very important, because although the entire mobile market is expected to shrink 4% this year, smart-phone sales are expected to increase 27% to 177 million units.

Apple properly foresaw that smart-phones are the future as people expect their cell phones to offer more and more features. In that it has an advantage for creating the image of a pioneer. But that will not be enough to stay on top. Personally, I think Apple will continue to out-pioneer all rivals.

Either way, the smart-phone war will mean an increasingly better product at a lower price as rivals seek to increase market share. Apple’s price cutting of the iPhone 3G 8GB model from $199 to $99 is a reflection of this. Apple would probably have not cut prices were it not for the release of the equally priced Pre.

Let the war ensue.