A reader over on appleinsider has discovered handwriting recognition software in the 2.0 software. Unfortunately it currently only recognises Chinese characters but it is perhaps a sign of things to come.
It’s not the first time the iPhone and handwriting recognition have been banded around together. Recently Apple posted a job advertisement for a handwriting recognition engineer. Talk of a Newton remake has also surfaced in the last twelve months. Quite how writing with your finger would work though, I’m not quite sure !
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