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

[sandiegoconservative]

Why is anyone on this site in favor of this product?

It was manufactured by a CORPORATION.
It is manufactured using items which RUIN THE ENVIRONMENT and contribute to GLOBAL WARMING.
It is EXPENSIVE.
It was not made by the GOVERNMENT.
It promotes INDULGENCE.
Cell phone uses are often ANNOYING.
It promotes GLOBALISM, EXPANSIONISM and CONSUMERISM.

Most of the talking points people on here do not like. So why the hype?

[vietveter]

Sounds a bit like the repub licKan party platform.

[iPolitics]

Why are you on this site? That's a better question.

[hypnotoad72]

I'm glad he is. He doesn't sound trollish, at least not with that post. There is a certain irony in what he says. The rock group "The B-52s" released a new song called "Funplex", which attacks consumerism. The irony is, the band needs it in order to get their word out.

And, let's face it, we all need it - otherwise we wouldn't be posting here.

[sandiegoconservative]

I am here to express an opinion. That's all.

I hope you have a wonderful day!

[KarateKid]

Wow, tell us what you REALLY think. LOL.

I do agree with one thing, that many cell phone users ARE annoying, especially on plane flights. These bozos have to call someone already waiting at the luggage carousel that they just landed, like they can't tell by looking at the arrivals screen. "Hi, we just landed. I'll see you in a few minutes at the baggage claim. Love you. Bye." Sheesh........

[Exasperated]

Just a f-ing moron.

[sandiegoconservative]

Wonderful response. Another bucket from the well of knowledge . . .

[LarsGruber]

did the iPhone put that stick up your b*tt?

[ewj1]

Finally a half way decent iPhone at a reasonable cost. iphones changed the way young folks buy phones which is great but this phone still lacks a few basics. At the 299 for 16G those minor missing components are just that minor.

[CaptainHowdy]

"changed the way young folks buy phones"???

How, on credit?

[ewj1]

They would to go into a phone store and ask for certain features than grab a phone. Now they look at the iPhone and compare features.

[Sporin]

as long as it's locked to the AT&T/Cingular network I can't even GET one in VT.... this phone would have been an even bigger hit if they hadn't of locked it to a single, sub-par carrier.

[TrueBlueMajority]

i agree--i don't want to change to AT&T, not only because Verizon has better coverage but because AT&T is in too deep with the telecom immunity issue. Aren't they the ones gathering all the phone and email info through the Narus machines and giving it to BushCo?

[fflores]

i had/have a first gen iphone.... its a great phone... and the new one looks to be even better, but the problem i had with the phone wasn't the price of the phone but the price of the service contract.... paying $150 a month for my phone ($1800 a year) just wasn't worth it... it wasnt like i was racking up the minutes either, that was just the basic plan.

I downgraded to a samsung phone and still use the iphone as basically a itouch

[LarsGruber]

I pay $50 a month for my basic iPhone plan.

You should look into that.

[Sundialsvc4]

This announcement should come as a surprise to no one. Now that the product has clearly achieved success (as expected...) it can follow the usual progress-path of offering more features at (slightly) lower prices. This is not "the real story."

To my way of thinking, "the real story" continues to be "what the iPhone actually IS." It's a computer. Okay, it's a Macintosh. It's a Macintosh that also happens to be "a phone," and although it still remains somewhat-locked to AT&T (not a bad thing, since "Ma Bell" is STILL "Ma Bell"...), the real-story is that "it's a Macintosh, not (just) a phone."

Sometime in the next calendar year, it's reasonable to assume that other electronics vendors will "match this," and even "top this." Let the games begin!

[elpollo]

As a guy who has been Mac since 1989, I won't consider it a Mac until they offer it with an option of a 160 GB hard drive like they have in the iPod classics. I would be willing to put up with shorter battery life and/or a larger, heavier case. They just don't want to kill their iPod classic and touch sales.

[CaptainHowdy]

FFS, it is NOT a Macintosh any more than a Treo is Windows.

[drkazmd65]

As an affirmed Luddite,.. why the hell is this important? Why on earth do I need to be able to access the internet constantly? Why on earth do I need to be connected to everything, potentially everybody all the time?

It's a friggin' phone for Christ-sakes.

[Rockwell]

No, no. You don't understand. Steve Jobs is the latest in a long line of holy prophets to bring his tablets down from the mountain top. This tablet fits in the palm of your hand and can answer any of life's questions with a quick Google.

[drkazmd65]

Touche o Rockwell!

That comment made me smile to the depths of my semi-anti-techno heart.

[FZliveson]

Yeh, Rockwell, what's the matter did the string break on the two tin cans you've been using for a phone? There are some hard-working people who like nice things that are good tools and work well. Jobs built a Fortune 500 company in his garage that has nothing to do with war materials, has innovative technology, provides tens of thousands of employment opportunities all over the world. Why do you have to smear a good new product? What's the payoff for you?

[slappymagoo]

Well, I don't have an iphone (and don't plan on getting one anytime soon), but my motorola q has internet access. With the long commute I have, it's great to be able to surf the net, especially on heavy transit days when you can't even get a seat on the train. It's not powerful enough to access huffpo, but I ca read americablog, crooks and liars, kos, carpetbagger, and even some (gasp!) non-political sites.

The q also has a windows player and a micro sd slot, but I rarely use the phone for a/v entertainment. I also own an Archos 605. It has 160GB, touchscreen and wifi access, & plays everything but protected AAC content, which usually sounds like ass anyway. And I use a docking cradle that allows me to record from cable/satellite, DVR, DVD, VHS. For the commute I have, it's a much better option for me, though I'll admit it's not the best option for everyone.

[sazerac]

Ssh now, don't cause a fuss. C'mon, let's go to the barn raising.

[drkazmd65]

*big smirk* - no barn raisin' this week,... got the crops to get in first!

[OSIRISZ]

hopefully this will not be made available to only at&t users, cause at&t sucks!!

[Bobleblah1]

Too bad nobody has any money left after buying gas.

Thanks

Dick Satan Cheney

[cynicalidealist]

This is where cities rule! I walk everywhere, and on occasion, take public transit. Car? What's that?

Of course, I recognize that this effects everything, including the cost of distribution and delivery, my oil/electric bill. But at least in this sense, I'm not part of the problem.

McCain is for privatizing Amtrak - essentially eliminating it!

Let's start a discussion around Urban Policy during the general election!
-CI

[zeiben]

Wow. I thought McCain was bad with Suni and Shia. AP can't even get june and july straight :)

[slinkigirl311]

iphone has officially screwed over everyother smart phone producer. =)
now everyone is going to have to lower their prices to even compete.
pwnd.

[venicesurfer]

im getting one. cant wait.

[kwfryatl]

Unfortunately, as much as I would love to have an iPhone: approx. three weeks ago, I switched from Verizon to AT&T; cell reception/service was terrible; switched back to Verizon three days later.

[KillTheMessenger]

3G, 4G, who cares? My phone does not even get reasonable voice reception along the railway line I use for commuting. Instead of smarter phones, give me a working network first. Then we can talk about me buying a toy I don't need.

[HopscotchGirl]

Can you and your techno geeks hurry up already with the new iphone, you know we are all waiting!!!