Apple unveiled a new model of the iPhone - the 3G S - that looks the same but will sport a faster processor, longer battery life and sought-after features like an internal compass, a video camera and a photo camera with better resolution and auto-focus. A 16-gigabyte version of the 3G S will cost $US199 and a 32-gigabyte version will be $US299.
The 8-gigabyte iPhone 3G, which came out last year, now costs $US99, instead of $US199. When the iPhone debuted two years ago, eager Apple fans had to shell out $US499 for a 4-gigabyte version and $US599 for 8 gigs.
The iPhone news was the highlight of a two-hour presentation by Apple executives at their annual conference for software developers. Apple is known for ending these kinds of events with a last-minute surprise, leading to some anticipation that CEO and co-founder Steve Jobs might make a cameo.
But Jobs, who is due to return from medical leave at the end of this month, did not take the stage. Apple's top marketing executive, Philip Schiller, exited without uttering the company's signature line that there would be "one more thing."
The latest iPhones go on sale June 19, just as two-year contracts for the buyers of the original models are expiring and Apple's phone faces tougher competition from the likes of Research in Motion Ltd. and Palm Inc., which just came out with the $US200 Pre smart phone.
Shares of Cupertino, Calif.-based Apple slipped 82 cents to close at $US143.85.
Lowering the price of the least expensive iPhone could be risky for Apple, which is betting the new versions have enough appealing features to keep higher-priced models selling briskly. AT&T Inc., the exclusive carrier of the iPhone in the U.. said Monday it's confident its wireless profit margins will hold steady overall. AT&T shares fell 16 cents to $24.40.
Apple might also be banking on expanding the profits it reaps from taking 30 percent of the revenue from downloadable applications on the iPhone and the iPod Touch. A new version of the iPhone operating software, available for download June 17, lets software developers sell additional content, like electronic books or extra levels to a video game, within applications.
Among other upgrades to the iPhone, the new software will let people download movies and TV shows using the device's cellular connection. It will let users send photos and videos the same way they send text messages, bringing the iPhone in line with other smart phones. (AT&T won't offer this feature until late in the summer.) And the new software will let parents limit the kinds of applications kids can download to the device.
Apple had already announced other new features in the new software - such as the ability to cut, copy and paste text - and the ability for "tethering," which means using the iPhone to connect a computer to the Internet. However, while 22 wireless carriers will enable tethering, AT&T will not.
For its MacBook line, Apple showed off new MacBook Pro laptops that boast longer battery life and faster processors. The company rolled out new 13-inch and 15-inch Macbook Pro laptops that start at $US1200 and $US1700, respectively, $300 lower than existing similar notebooks.
It also lowered the price on the ultra-thin MacBook Air to $US1500 from $US1800. Its 17-inch MacBook Pro, unveiled in January, costs $US2500 and up, though it now has a faster processor at the same price.
Apple also is trying to steal share in the computer market by enhancing its Mac operating system.
The next version, Snow Leopard, comes out in September, before Microsoft Corp.'s next edition of Windows hits PCs Oct. 22. Among Snow Leopard's improvements is built-in support for Microsoft's Exchange Server, so Apple programs for e-mail, calendars and contacts could become more useful in corporate settings.
