(Updates with details in third and fourth ?aragraphs about what upgrades may be)

Apple Inc. (AAPL) will provide a "sneak peek" of its latest iPhone software next week, amid new projections about weakening sales of iPhones and other smartphones.

At a media event Tuesday, Apple intends to introduce the third version of its iPhone operating system software, and new tools for creating software programs distributed through Apple's App Store, the company said in an invitation distributed Thursday.

The new operating system likely means the iPhone will be outfitted with new features which could potentially boost sales of the device. A spokeswoman for the Cupertino, Calif. company had no additional comment.

Gene Munster, a Piper Jaffray analyst, sees Apple demonstrating a "universal search capability" to easily find a contact or other information stored on the device. The addition of push email notifications, turn-by-turn directions, and a cut and paste feature are among other features on iPhone owners wish lists, according to postings from Apple fan forums.

Apple's new software emerges as the global economic crisis has hit the market for iPhones and other smartphones. The market researcher IDC Corp. on Thursday lowered its 2009 worldwide smart phone sales growth forecast to 3.4% from 8.7%.

Competition among smartphone software vendors is also heating up. This week, Apple rival Microsoft Corporation (MSFT) unveiled new elements of its latest smartphone operating system. Meanwhile, German software maker SAP AG (SAP) and Sybase Inc. (SY) disclosed a partnership to deliver mobile enterprise programs to workers on the go.

Apple shares were up 3.3% at $95.74 in recent trading. The stock has gained 12% this year, but is down nearly 50% since August.

-By John Kell, Dow Jones Newswires; 201-938-5285; john.kell@dowjones.com

(Ben Charny contributed to this report.)