According to CNet Asia, the next firmware update for the Apple iPhone will support Chinese Character recognition, and also pinyin. The character function works by having the user draw the character on screen with their finger, than it searches a database for a matching character while offering other possible suggestions. The next model iPhone is expected to debut this June with 3G support and greater functionality.
http://asia.cnet.com/crave/2008/05/06/new-iphone-firmware-features-chinese-handwriting-recognition/
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