iPhone 3.0: Apple Drops Price To $99

SAN FRANCISCO (AP) -- Apple Inc. slashed the entry price for an iPhone in half and rolled out new laptops for $300 less than previous models Monday, the company's first dramatic price cuts since the recession began a year and a half ago.

Apple unveiled two new models of the iPhone -- the 3G S -- that will sport a faster processor and sought-after features like an internal compass, a video camera and an improved photo camera. A 16-gigabyte version of the 3G S will cost $199 and a 32-gigabyte model will be $299. The 8-gigabyte iPhone 3G, which came out last year, will be cut to $99 from $199.

The iPhone news highlighted a two-hour presentation by Apple executives at their annual conference for software developers. Despite anticipation that he might make a cameo, Apple CEO Steve Jobs did not take the stage. He is due back from his medical leave at the end of this month.

The newest 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.

Shares of Cupertino, Calif.-based Apple were down 90 cents, 0.6 percent, at $143.77 in afternoon trading.

Lowering the price of the least expensive iPhone could be risky for Apple -- a bet that 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.S., said Monday it's confident its wireless profit margins will hold steady overall. AT&T shares were down 3 cents at $24.53.

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.

In the updates to the MacBook line, Apple showed off a MacBook Pro laptop with a 13-inch screen that starts at $1,200. A 15-inch model sells for $1,700 and up -- both $300 less than existing similar models. The company also lowered the price on its ultra-thin MacBook Air to $1,500 from $1,800.

Jessica Mintz reported from Seattle.

Comments

[jburtreynolds]

there weren't any contracts on the 1st generation iphone, only the 2nd. now those of us who bought the 2nd gen are screwed.

[TheBrizz]

The 1st-gen required a contract too, but the price was the same for everyone, regardless of contract status.

[ominous]

GREAT AD!

[larissa68]

Let me get this straight, they improved the CAMERA? Oh Apple, WHY? Who cares? Who uses a 3.2 megapixel camera? Especially with that lens?

And they finally added cut and paste after how many iterations? That should have been in version 1 but whatever.

Until they add more memory so the thing can actually hold enough TVShows, music and movies to be worthwhile like my iPod classic, I'm not interested.

Oh yeah, and until I won't get screwed by AT&T.

[MIChick]

Great. Tell me when they will make IPods affordable, I might care.

[Cent]

iPods aren't affordable??

[CountryBeforeParty]

Supposedly Verizon Wireless is in negotiations to also carry the IPhone. If/When it happens I will probably get one when my next contract comes up.

[theone718]

Now THIS is capatilsm at it's best. Lower those prices or stay or lose your customers. I have a bold, my screen flipped and they told me I had to buy a new one (my scrren messed up 4 months from Idk what) for 600 beans. I am close to finished with ATT

[acslaterson]

I got my iPhone in February and I love it! After being a Sprint customer for 9 years and dealing with the crap phones they put out I am glad I switched to AT&T. I live in Columbus, OH and I have no trouble with reception. The only thing I don't like about this announcement is that there is no flash player download, but I can wait another year for that though. I think the tethering internet is a really cool feature. I had actually been thinking about whether the iPhone could do that last week and now it is possible. Video conferencing would be cool but I guess it is considered a US security risk(even though I heard phones in Europe have this capability). I just wish AT&T would step up and start supporting ALL of the iPhone's features.

[Z-Liberator]

Security Risk?

[acslaterson]

That's what I said when I found that out last week. I was talking to a techie friend and the situation he presented was airports and airplanes taking off and being recorded for potential rocket attacks. Made absolutely no sense to me, they have cameras built into laptops and they don't ban those in airports!

[CptKendrick]

I don't care if they give it away for free.

I can't get AT&T up in the mountains, but Verizon, I can get that anywhere.

The iPhone is just is useless gadget until I can get the same reception I have now.

[DCX2]

I hear that. Either Apple has to free the iPhone from AT&T, or Verizon will own those customers when they carry the a decent Android phone.

[hypnotoad72]

AT&T has said they are working to improve on that -- and relatives I've got have said AT&T has put in a tower in their area.

I'm ECSTATIC over this development; it's another reason for me to traverse. (narcolepsy is the other problem, but now I can visit and tether to do the online courses...)

[Reginald Brown]

My first computer was a performa, then an iMac, then iBook. I want an iPhone but absof...ckinglutey refuse to have any attachment to/realation with ATT.

When they were Ma Bell I did all I could to thwart their endeavors.

[CoreyGens]

Apple should break its contract with AT&T and make the phone available for other providers. I would buy it, its a great phone.

[Cryostatic]

They've been offering it for free in Japan for awhile now with the same 2-year contracts.

So it's not that the thing is actually worth what people here are willing to pay for it, it's just that we're sheep, silly sheep, willing to pay that much for the newest piece of iPod goodness.

[COPerez]

Ummm... that's called "the market." As in "whatever the market will bear."

[Gil76]

Will the new iphone still require a wi-fi connection? If you're not near a wi-fi area you can't go online. So what good is it? I think I will buy an ipod and keep my cell.

[marred]

THe iphone does not require a wi-fi connection to go online. You can go online thru the 3G network. I have one and it's widely known you don't need wi-fi. Seems you missed the boat there :)

[OswegoKayaker]

I believe you are thinking about the ipod touch. That requires wi-fi to get online. Very cool.

[Axekick]

I just use my cellular phone for telephone calls so I wouldn't care if they gave them away I wouldn't pay for a data plan and it would be pointless.

[JPFranklin]

I used to say the same thing, then I got a data plan and I don't know how I lived without it haha

[Kuuba]

Easy, just think back to a time before cell phones were so accessible and there was no internet.

[SColbert]

I still can't afford the iphone.

[JPFranklin]

You have your own basic cable tv show and can't afford an iPhone?

[gabberwok]

For those of you who already have an iPhone, take the list price with a grain of salt. Upgrades are much more expensive this time around than for the 3G. For example, the top of the line 3GS costs $299 for a new AT&T customer, but costs $499 for someone who purchased an iPhone 3G when it first came out or $599 for some unlucky people (and I think $699 without a commitment).

AT&T is really a POS, the only problem is that all the other phone companies are too. Verizon is more reliable, but they're still bad as well, and whatever advantage Verizon has now with CDMA won't matter much when every company upgrades their networks.