Video: iPhone price cut heats up phone wars

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msnbc.com
updated 6/8/2009 3:13:42 PM ET 2009-06-08T19:13:42

Apple today unveiled the iPhone 3GS, its third iteration of the popular smartphone, which will include a video camera and an improved still camera, as well as a digital compass and faster Web browsing and launching of programs.

Pricing will be $199 for a 16-gigabyte version, and $299 for a 32-gigabyte model. It will be available June 19.

The current iPhone is known as the iPhone 3G, for the third-generation cellular network it runs on; the addition of the "S" is for "speed," said Phil Schiller, Apple senior vice president. "This is the most powerful, fastest iPhone ever made," he told attendees at the Worldwide Developers Conference in San Francisco.

The phone will also feature an improved 3-megapixel camera with auto focus, an upgrade from the iPhone 3G and original iPhone, which have 2.0 megapixel cameras. The current iPhone 3G will stay on the market, and cost $99 for the 8-gigabyte model. Until now, pricing on that phone was $199.

It is the lower-cost iPhone that had been rumored in recent months. "We want to reach even more customers," said Schiller. The $99 iPhone is available immediately.

The 16 GB iPhone 3G, which has cost $299, will be available for $149 "while supplies last," said AT&T, the exclusive carrier of the iPhone in the United States.

CEO Steve Jobs, on leave since January for health reasons, did not make an appearance at the conference, as some had hoped. He is expected to return to the company later this month, officials said.

Also unveiled Monday were new features of what is called iPhone 3.0 Operating System, which will be available June 17. The software will be a free upgrade for existing iPhone owners, and $9.95 for those who own the iPod touch, which does not have a phone, and uses wireless networks to connect to the Internet.

Image: iPhone 3GS
Apple via AP
The new iPhone 3GS has the same dimensions as the iPhone 3G, but weighs about an ounce more, at 4.8 ounces, with a video camera.

The ability to cut, copy and paste text will be available for e-mails, Web pages and other programs on the device, as will another key feature: being able to send photos — but not videos — using text messaging.

Photos can now be sent by e-mail using the iPhone, but not text messaging, or MMS, as it is called.

Multimedia messaging for the iPhone, part of the new software for Apple's device, will be added, but not available until the end of the summer, the company said.

Apple vice president Scott Forstall said AT&T, the exclusive carrier of the iPhone in the United States, will not be ready for multimedia messaging, or MMS, for a few months yet. 

Users will be able to shoot video, then edit it, using the iPhone 3GS.

Voice control is another new feature, lettiing users speak commands into the phone to dial by name or number, as well as to tell the phone to play a song on the iPod, which is part of the device.

The iPhone 3.0 software will also include three types of "push" notifications — alerts, numerical badges and sound alerts, Forstall said.

In addition, voice-based, turn-by-turn GPS navigation software will be available this summer as an add-on program provided by TomTom, a leading maker of GPS devices.

Apple has sold more than 40 million iPhones and iPod touches since the devices were first released nearly two years ago, the company said yesterday.

There are now more than 50,000 applications, or programs, in Apple's App Store, said Forstall. The store was launched last July, and response from software developers has been "staggering," he said.

The iPhone 3G, which went on sale last July, is facing an increased number of competitors in the past year, from the Palm Pre, which went on sale Saturday, to several models of BlackBerrys from Research In Motion, as well as other phones from HTC (including the Google phone, the G1) and Samsung.

Smartphones, which totaled 17 percent of mobile phone sales in the first quarter of 2008 now account for 23 percent of sales, according to a recent report from The NPD Group.

The iPhone has been the best-selling smartphone in the United States, but in the first quarter of this year was eclipsed by Research In Motion's BlackBerry Curve models, something The NPD Group attributed to "an aggressive buy-one-get-one' promotion" from Verizon Wireless.

The iPhone had 19 percent of the smartphone market in the United States as of the first quarter of this year, according to IDC research. RIM, with many different BlackBerrys, led with 55 percent, Samsung with 5 percent, and HTC, T-Mobile's G1 "Google" phone and Palm each had 4 percent, according to IDC Research.

New laptops introduced
Apple also today introduced a lineup of laptops that feature its aluminum unibody build, faster processors, and longer battery life, and lowered prices by about $300 on several of its portable computers.

Also, the company's lightest-weight laptop, the MacBook Air, at 3 pounds, now will sell for $1,499 with a hard drive, instead of $1,799. A model with a solid-state drive, which is less fragile than a hard drive, starts at $1,799. The hard drive will be 120 gigabytes; the solid-state drive, 128 GB.

Apple vice president Schiller also unveiled a 13-inch model MacBook Pro that is billed as having seven hours of battery life using its non-removable, lithium polymer battery. A "typical user," he said, will get about five years of use from the battery. Pricing on the 13-inch MacBook Pro starts at $1,199.

Schiller said that Apple's unibody build, tried first in its 17-inch MacBook Pro, has been a great success. "Customers couldn't be happier with them," he said.

The unibody build will be used for the 13- and 15-inch MacBook Pros.

The 13-inch MacBook Pro for $1,199 has a 2.26 GHz processor and 160 GB hard drive; another model with a 2.53 GHz processor and 250 GB hard drive costs $1,499.

The 15-inch MacBook Pro comes in three configurations: $1,699 for a model with a 2.53 GHz processor and a 250 GB hard drive; $1,999 for a 2.66 GHz processor and 320 GB hard drive; and $2,299 for a 2.8 GHz model with a 500 GB hard drive.

Apple's 17-inch MacBook Pro, which was unveiled in January, starts at $2,499, a $300 price drop.

Apple also announced it is adding support for Microsoft Exchange support to Mail, Calendar and Address Book to Snow Leopard, its update of the Mac Operating System, known as Leopard. (Msnbc.com is a joint venture of Microsoft and NBC Universal.)

The update, due out in September, will cost $29 for existing users of Mac OS 10.5. Exchange Sync was added to the iPhone last summer, a draw for many users who want to be able to check their work Outlook e-mail on the device.

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