This morning at the Guggenheim Museum in New York City, Apple announced their newest version of iBooks, with a major twist that’s designed to remove it from its position as a late-entry contender in the Kindle vs. Nook ebook battle. Instead, Apple’s focusing on education, with the eventual aim of replacing paper textbooks with iPad versions.

The new version of iBooks frees the app from its prior restrictions–now it can boast video, audio, interactive multitouch controls, and all kinds of new annotations. That’s key to Apple’s idea of the future of textbooks, which will look more like our friend Theodore Gray’s amazing periodic table app The Elements than a static PDF.

But text is still a major part of the new platform–these are textbooks, after all. You’ll be able to read them in portrait or landscape, and make notes and annotations with digital stickies. Maybe the coolest part of the entire project is the automatic note-card creation: it’ll combine all of your stickies automatically into digital versions of 3×5 note-cards for self-quizzing. Of course, there’ll also be interactive quizzes throughout the book/app.

Apple already has the big three textbook publishers on board (that’d be McGraw Hill, Houghton Mifflin, and Pearson, who combine to take 90 percent of the K-12 textbook market). But what’s interesting is that Apple is starting out targeting high schools. The books will be cheaper, yes–textbooks will cost $15 or less–but shelling out for iPads is still a ridiculously expensive prospect for an American public high school, so hopefully there’ll be some kind of (major) discount for schools.

There’ll also be a new platform for self-publishing, called iBooks Author, for Mac OS. According to the New York Times, it’ll require “no programming knowledge” and will mostly provide templates for prospective textbook authors to use.

iBooks 2 is available now for iPhone and iPad, though the textbook features are iPad-only.