Highlight, the iPhone app which attempted to make a big splash at this year's SXSW conference, is back with a new version. The update adds in a few new features that make the service feel a bit more well-rounded — but they're more likely to appease the few users Highlight currently has than draw new ones in.

The app, if you haven't heard of it, is designed to run in the background and notify you when other people you might be interested in based on your social or interest graphs are nearby. It sits at the intersection of ambient information, location, and social networks — but doesn't really have a defined place or a clear, single use within any of those three places. However, that uncertainty isn't a mistake; it's by design.

At SXSW, the reaction to the app was decidedly mixed, primarily because it pushed too many notifications and drained already stressed iPhone batteries too quickly. Both of those issues have been fixed in this new release, says CEO Paul Davison.

Highlight is also beefing up its personal profiles for each user. New profiles include notes that can be left by other users, a dedicated biography field, interest pages, and a "post nearby" option that acts a little like a roving status update. The app also adds a refreshed design, more granular control of notifications, improved algorithms for presenting relevant notifications, likes & threaded replies for posts, sharing to Facebook, and localized versions for French, Italian, German, Spanish, Dutch, Portuguese, Brazilian Portuguese, Chinese, Japanese, and Korean.

Essentially, nearly every major feature you would expect on a fledgling social network has been added into version 1.2. Every feature, that is, except for a clear and well-defined set of norms and expectations for its users' behavior.

"Any time you have a technology emerge that allows you to share in a way that you haven’t been able to share before, there’s this really familiar pattern."

Although Highlight has added several new ways of interacting with other people on the network, it still feels like a service without a compelling message. Yes, the idea of an app that automatically reminds you that you met that guy John last month at a party and you both like the same band is is somewhat cool — but getting from cool to compelling (by way of creepy) requires reaching some level of mass adoption. Highlight isn't there yet.

Davison himself, though clearly optimistic about the possibilities, isn't under any illusions about the challenges his new social network faces. "Any time you have a technology emerge that allows you to share in a way that you haven’t been able to share before, there’s this really familiar pattern." The pattern, he says, goes from most finding it slightly off-putting, to a subset finding particular use cases that work well, to viral adoption.

The obvious example of the pattern Highlight is trying to match is Twitter. First, create a strange new social service most don't see a need for; second, have a SXSW coming-out party; third, add in an organically growing set of features requested by users (as Twitter did with the @reply); then, as you grow, adamantly keep the service's functionality limited so as to not overextend your resources; and finally achieve widespread understanding and acceptance as users begin to define for themselves what the service is and isn't good for. Highlight has already created its strange new service and made the rounds at SXSW. With version 1.2, it's attempting to follow the rest of the template.

"The fundamental atomic unit of Highlight is the person."

Highlight has formed the new features in the mold of Twitter as well, creating interaction points without defining exactly how they should work in a social context. "We can think of 5 or 6 uses cases. but we have a really strong sense that there are many others that we’re not imagining." Highlight is clearly hoping its users will organically come up with compelling new ways of using the service in the same way that Twitter's early users did with the @reply. That's a nice idea, but it does make for a higher barrier-to-entry (and barrier-to-understanding) for new users.

Highlight isn't interested in adding specific place check-ins or restaurant reviews or whatever else. As Davison puts it, "The fundamental atomic unit of Highlight is the person," and so Highlight's features will always be centered around that person, his or her location, and his or her profile.

The new version of the app looks much better and the new additions (especially the beefed-up personal profiles) do make it slightly more compelling than the simple "who's near me and who have I met" service it has been to date. If Davison's estimate that the battery life hit has been reduced by a factor of three or four is true, it may even win back some of the people who tried it and uninstalled the app on performance grounds alone.

With all that, though, the question is whether Highlight can grow quickly enough to establish itself. A social network needs many active, engaged users to turn the corner from a great demo to a live network. There's no guarantee that what worked for Twitter will work for anybody else.