New 3G iPhone Introduced Today

SAN FRANCISCO — The iPhone will soon be $200 cheaper and support satellite navigation and faster Internet access, but higher monthly service charges are likely to erase most of the savings.

Apple Inc. revealed Monday that it has scrapped its pricing plan for the iPhone as it unveiled a model that works over faster wireless networks, addressing key criticisms about the device that have hurt the company's foray into the cell phone industry.

An 8-gigabyte version with the new features will go for $199 when it goes on sale July 11, and a 16 gigabyte model will cost $299, the Cupertino-based company said.

Current iPhone owners who buy a new model and sign up for a new AT&T contract won't have to pay any penalties to get out of their current contract, AT&T spokesman Michael Coe said. And anyone who bought an iPhone in an AT&T store after May 26 can return it before Aug. 1 for full credit against a new one _ less a 10 percent restocking fee.

Apple plans to make up the difference in sales revenue with volume _ and with subsidies wireless carriers will now pay for the right to carry the gadget.

In changing the pricing arrangements, Apple is pulling out of revenue-sharing arrangements with some wireless carriers, a move that frees the carriers to charge higher prices for the service.

Apple shares fell $4.03, or 2.2 percent, to close Monday at $181.61 on the news, a sign that some investors were hoping for more and others were taking their profits after a four-month run-up in Apple's stock price, which leaped from $120 in March.

The new iPhones, initially to be introduced in 22 countries, are designed to work over so-called 3G, or third-generation, wireless networks and have global-positioning technology built in.

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They will also support Microsoft Corp.'s Exchange software, an addition that puts the iPhone in more direct competition with Research in Motion Ltd.'s BlackBerry and Palm Inc.'s Treo smart phones and is intended to appeal to the business market.

Analysts have said Apple needed to slash the iPhone's price and make it usable on faster networks to hit the company's target of selling 10 million iPhones by the end of 2008. Apple said the 3G iPhones download data twice as fast the older ones.

Apple Chief Executive Steve Jobs said Apple has sold 6 million iPhones since the first model launched nearly a year ago and 700,000 since March. That points to a steady slowdown in sales starting in the fourth quarter last year as customers waited for a 3G version.

Jobs showed off the new models of the iPhone and about a dozen new applications for the device at Apple's Worldwide Developers Conference in San Francisco.

New applications range from video games that use the iPhone's motion-sensing technology to guide characters to study tools for medical students and a program that allows users to find nearby cell-phone-carrying friends on a map.

One program brings real-time video highlights and game stats from MLB.com; another receives news from The Associated Press and participating newspapers based on the user's location _ and lets the user submit news tips and photos to the AP.

Apple also announced a new Web-based service called "MobileMe," which the company describes as "Exchange _ for the rest of us," a consumer-friendly way for people to link their iPhones to their home and work computers so updates entered into one device automatically appear in the others.

MobileMe will cost $99 per year and come with 20 gigabytes of online storage.

AT&T Inc., the exclusive U.S. carrier for the iPhone, said service for it will start at $39.99 per month, plus $30 for unlimited data. That works out to a $10 increase from the cheapest plan for the first-generation iPhone; over the course of a two-year contract, that increase wipes out the savings from the price cut Apple announced Monday.

AT&T's pricing covers only U.S. residents. While iPhone prices will drop outside the U.S. too, it wasn't clear whether other carriers would raise monthly fees to compensate.

AT&T also warned that it will take an earnings hit due to the pricing because new subsidies it agreed to pay will produce the iPhone price cut _ not a reduction from Apple.

Apple said in a regulatory filing that under most of its new carrier agreements, it will not receive a share of subscribers' monthly service fees as it has under contracts for the first-generation iPhone.

Jobs said Apple waited to improve the iPhone for use on the faster network because the chips available when the iPhone first came out sapped too much battery life and were too bulky to fit the iPhone's slim design.

The addition of global-positioning technology improves the iPhone's accuracy in locating users. Current versions use a combination of cell-phone towers and Wi-Fi locations to help users figure out where they are.

The 1.73 million iPhones Apple sold in the first three month this year gave it a 5.3 percent share of the worldwide smart-phone market, according to research firm Gartner. Apple has been adding overseas markets gradually with carrier deals.

Comments

[the964kid]

I've owned Apple computers since the early 90s and had my share of Ipods. But the Iphone just isnt as good for texting/typing as other high end phones on the market. When the Iphone has a full non virtual keyboard I'll be interested.

[gcswift2]

that would mahe it a crackberry and defeat the purpose of the design

[Shaddup]

Who cares. I have a phone. I use it when I have to call somebody. I can get a new one for like $5. If I want to play games, I do it with real people. If I want a story, I do this thing called reading. I have a camera for pictures. George Carlin: "The American way. Nail two things together that have never been nailed together before and some schmuck will buy it. Iphone= schmucks.

[EddieMcWords]

Yeah, but can you read THIS BLOG on the TOILET AT WORK?

Not without an iPhone, son.

Can't wait!

[CaptainHowdy]

Strange... my Treo can read this blog. Has been able to for years now.

Am I breaking the law of physics or something?

Or are you just an idiot?

[KarateKid]

LMAO !!!

[FutureRefugee]

Actually, almost any Web-enabled phone can read HuffPost (and many other Web sites), if you do it through Google. Use Google to search for HuffPost, and follow Google's link to it. Google will translate the Web pages into a simple format that your (or at least my) phone can display. My phone's Web browser fails miserably if it tries to directly display HuffPost, but it works well through Google.

[AmericanSinceFeb08]

How many bags do you travel with? Time to park the SUV and carry an Iphone.

[ErnestineBass]

There's only one word for everyone who paid $600 for the "original" i-phone. SUCKERS!

I get along just fine with one of those $10 a month, no-contract throwaways. Go figure.

[robinhood2]

I'm with you Ernestine. I wonder how many of these early adapters are still paying off their student loans or are accruing interest at 22% annually on their credit cards.

[drkazmd65]

Have had my $29 flip phone (after $50 rebate) for over 4 years now,... works fine and my rollover minutes are nearly infinite.

[KarateKid]

The iPhone isn't for everyone. If you don't travel on business, and have a computer at work and at home, the cost isn't worth it. If you are looking for just a phone, iPhone is not worth the price. However, if you do travel, and take your laptop along, have a lot of time to kill at airports, and you're on an expense account, it is the best.

[Maco]

The plans for the new phone will increase by $10. They will now be $30 over what you pay for you voice plan.

[kellygrrrl]

wake me up when Apple makes a hybrid convertible

[ErnestineBass]

Ragtop grrrl, eh? heh heh

[kellygrrrl]

oh, he!! yeah Baby!

I have very few demands

but they are iron-clad!!!!!

[fcsakes]

Doesn't this thing use AT&T, you know, the communication company sucking on Bush's hind tit?

[KillTheMessenger]

I just sent $200 to Obama... it's more important for the country to have the right president than for me to have a hip whatever-t­he-thingy-­is.

[kellygrrrl]

I can haz both pleez? :)

[eXcommunicate]

lol...

cats.

[oscarp]

just keep Obama out of this conversation, this is business! oh, I forgot, he is politbusiness!!!LOL

[BigSid]

NOT IMPRESSED

Nothing really new with the exception of 3G (of course that's a big deal, but the reality is that the first iPhone shoulda been 3G like my Treo is).

Oh well, maybe the third generation will compel me to switch.

[rainey]

Will you still be stuck with AT&T to get service? That's a deal breaker for me!

[KarateKid]

Unfortunately, yes. And they stick you with a $20 per month charge on top of the phone usage plan for text messaging and data access. Think about how much you already have to pay for cable or DSL Internet access for home usage. It's outrageous.

[ErnestineBass]

Ummm...just say NO?

[gnostic19]

I have thought about getting rid of my land line ($50/month) and going w/ cell phone all teh way. I have always hated cells and just recently got one, but i NEVER answer the phone at home. I hate phones. I also have DSL over th phone lie, too. wIth my cell i pay $100, get 1000 minutes and go from there. usually lasts about 3-4 months. If i get rid of land line that would change, though.

[Erdgeist]

Zune Tang writes: Microsoft is way ahead of Apple. Remember the Zune and how it destroyed the iPod? Right now the huge R&D department of Microsoft is taking apart the new iPhone to see how well it stacks up against the super secret iZoom that can also diagnose a car engine and detect high explosives.

[KarateKid]

LOL. Isn't the Zune being discontinued? Destroy the iPod? Tell that to my kids.

[bikerdude]

Microsoft's r&d department....I visualize those turtles that Comcast uses to denegrate dsl in favor or their high speed connection. Hopefully someone will capitalize on the failure of Vista to come out with a cheaper, faster, more accessable operating system. I just "automatically" recieived an IE upgrade on my laptop and it has taken 3 consecutive days to get it to work. Everytime I check they are trying something else. I didn't ask for it and didn't have the opportunity to refuse the upgrade...
I am really disappointed in Microsoft.

[KarateKid]

Try Mozilla Firefox. It's free and besides, IE sucks.

[PenFighter]

Actually, try Ubuntu Linux. It's a very cool, fast, adroitly functional operating system with graphics and desktop capabilities Vista can drool over.... and the new version can install via Windoze, so you can just uninstall it if you don't like it. But you will. It will get to feel like you're crawling onto one of those turtles if you even think of opening Whinedows. Oh...and did I mention it's open source, and hence, free. If you have 5 or 10 gig free, try it.

[ErnestineBass]

Will it turn water into wine?

[mairs]

No but it will point you to the nearest pizza joint while your traveling.

[KarateKid]

I was the last in my family to get one. I have to admit, it is nice. I don't even mind the fact that the Internet access is kind of slow. I mainly use it when I travel on business, so my phone charges are paid for by my company, that's the caveat. I think the cheapest rate, $59.99 per month, is outrageous, that's $720 per year for a cell phone!!

When one travels frequently, however, it is a handy little device. Unless I have a specific project I'm working on, I don't even carry my laptop anymore. That in of itself is liberating. No more power cords, peripherals, heavy bags or taking it out for security screening. I can send/receive email and text messages, watch movies, listen to music, get the weather, and log on to the Internet all in one device, with a screen large enough to not ruin your eyes. Oh, I almost forgot, I can send/receive phone calls, too. It sure does make the waiting around in airports bearable, esp. with all the delays. And it prevents the need to buy magazines, newspapers and books, which are getting outrageously expensive also.

For everyday use, non travel, paying out of my own pocket, fuggeddaboudit. It's not worth the cost.

[planetmango]

$59 a month sounds like a lot, but a basic cell plan is $39 these days, so a $20 add-on for unlimited wireless connection so you can do all of those fun and convenient things you mentioned above is not so bad. But it all does add up.

[KarateKid]

Yes, until you factor in how much you have to pay for home Internet access, which in our case through Comcast is about $42 per month. So, to add it all up, it's over $100 per month just for Internet access; that doesn't even cover the phone charges for home as well as cable TV.

[hypnotoad72]

Everybody - don't buy this. Save your money instead! You can retire at 50 too if you work 30 jobs and buy nothing!

Unfortunately, if nobody buys anything we won't have any jobs to make money with...

I've never understood people (often Republican, but there are some Dems who are just as... dim?) who want it both ways: "Save save save" yet "Spend spend spend"! Many in the media blame consumers for spending too much when they're otherwise not saving too much.

No wonder psychiatry is a booming field; even in our current economy. As long as people can pay for it, of course.

[KarateKid]

You know, in Japan that's the problem. People save religiously and don't spend anything beyond essentials when things get tight and the government can't stimulate the economy to help businesses get going again. Wouldn't that be a nice problem for OUR government to have?

[LetsGetDumbAmerica]

You're still a douchebag Jobs....

[KarateKid]

Oh, come on, you sound like PC.

[dadw5boys]

The PC Evil Twin

[lvdragonlady]

Just who is going to be buying these? With price of food, gas and everything else, the last thing on my list is a $200 cell phone.....­........sh­eesh
BIG business at it's best......­..........­...

[torrrep]

I know plenty of people who are going to buy them.

[aristippe]

I rather go fishing