Apple unveiled the iPhone 4, its fourth-generation cell phone, which CEO Steve Jobs introduced by joking: "Stop me if you've already seen this" — a reference to a prototype of the phone that was seen worldwide two months ago when a gadgets website obtained it.
The new phone is the "biggest leap since the original iPhone," released in 2007, Jobs told the crowd at the Worldwide Developers Conference in San Francisco, as he showed off the device that has video calling called "FaceTime," HD video recording and a thinner profile than previous iPhones.
The iPhone 4, available June 24 in the United States, will cost $199 for a 16-gigabyte version, and $299 for a 32 GB model, with a two-year contract with AT&T, the exclusive provider of the iPhone in the U.S. The pricing is the same as last year when the iPhone 3GS was introduced. Both models come in either black or white.
Jobs also said that AT&T "made an incredibly generous upgrade offer. If your contract expires at any time in 2010, you can upgrade to the iPhone 4." The 3GS, with 8 GB, will continue to be available, and cost $99, he said.
Pre-orders for the new iPhone begin June 15. Some had hoped that Jobs would announce a Verizon Wireless iPhone, but he did not. Meanwhile, the video chat feature seemed to captivate the audience at the Moscone Center watching various examples of it in use.
While "Apple wasn't first with video chat ... they'll be (the) best (at) telling and evangelizing it to market," said technology analyst Michael Gartenberg, live-blogging the event for Reuters.
Video calling will only work between owners of the iPhone 4, and not for those who have previous iPhones. Jobs said it will have to run on Wi-Fi only this year, and not use AT&T's network, already heavily congested, but with improvements in the works.
'Thinnest smart phone'
The new phone, Jobs said, is the "thinnest smart phone in the world," at 9.3 millimeters, with glass on the front and back, and steel around the sides. The iPhone 3GS is 12 mm, or nearly half an inch.
The iPhone 4 has a second front-facing camera that can be used for video chats, something many users had hoped for in the new device. It also will have high-definition video recording at 720p, something that had been talked about as a way to further distinguish Apple's phone from others.
The camera on the back of the new phone is 5 megapixels, with a 5X digital zoom, and has an LED flash. It also has a micro-SIM tray.
The new design — 24 percent slimmer than the current model — is "crazy thin. Just in case you thought the thin wars were over," commented Current Analysis analyst Avi Greengart, also live-blogging the event for Reuters.
The phone's 3.5-inch screen is the same size as the iPhone 3GS, but has a 960-by-640 resolution and a "retina display," Jobs said, of 326 pixels per inch, beyond the 300 pixels per inch that the human eye can distignuish.
"This is super important," said Gartenberg. "Makes for much sharper text."
The iPhone 3GS has a screen resolution of 480-by-320 with 163 pixels per inch.
Battery, iBooks, Bing
Another key improvement: The battery life will be 7 hours, about 40 percent better than it is now for the 3GS model, said Gartenberg.
Also announced for the iPhone: Netflix movie streaming and Facebook's popular FarmVille game will be available for the iPhone. The popular movie-rental service will be available this summer.
Jobs also said that Apple's iBooks e-reader software, which was introduced with the release of the iPad in April, will be available for iPhone 4. Users will be able to sync books on their iPhones, iPod Touches or iPads, he said.
With Apple's iBookstore (part of iBooks), the iTunes Store and App Store (for the iPhone and iPad), "we have 150 million accounts," Jobs told the audience. "We think it's the biggest on the Web. We're No. 1."
The iPhone already supports Web search by Google and Yahoo, and Apple is adding Bing, Microsoft's search engine, Jobs said, which may surprise some. (Msnbc.com is a joint venture of Microsoft and NBC Universal.)
While Microsoft and Apple have had their rivalries, they may be nothing compared to the head-on match underway between Apple and Google, whose Android-based smart phones are gaining a strong foothold in the smart phone market.
Competiton
Both Android and the iPhone are "growing at the expense of BlackBerry and Windows Mobile" phones, said The Nielsen Company, which recently surveyed more than 11,000 consumers in the U.S.
A particularly strong contender is a phone that was just released Friday by Sprint, the HTC Evo 3G/4G. That device uses Sprint's fourth-generation, or 4G, network, which promises even faster speeds for handling data-intense uses such as video and music streaming and downloading.
Sprint is the first out of the four major wireless carriers with the newer wireless technology, although right now it is only available in 23 markets.
AT&T and Verizon Wireless are both looking to introduce their own 4G networks, Verizon Wireless later this year, and AT&T early next year. T-Mobile has just upgraded its third-generation, or 3G, network.
Staying ahead
Apple, with its fourth-generation handset, is aiming to stay a step ahead of rivals. But the bar is set high and it will be a challenge to wow Wall Street.
The iPhone has been a huge success since it debuted in 2007, boosting Apple's margins, transforming it into one of the world's leading mobile device makers and setting the competitive landscape in a smartphone battle that will play out for years.
Only last year, Research in Motion was seen as Apple's top rival. While the company's BlackBerry remains the smartphone of choice for many corporations that need fast email, Apple has made strides in that market as security concerns addressed by the BlackBerry eased.
But the iPhone's prime target — for now — remains the consumer.
Strong iPad sales
Meanwhile, Jobs also said Monday that the company's iPad, which went on sale two months ago, already has 22 percent of the e-reader book market. "We're selling one every 3 seconds," he said.
He also defended Apple's non-use of Adobe's Flash, software for viewing Web videos and slideshows, and the use of HTML5. "It's a completely open, uncontrolled platform," he said.
The iPad, now available in 10 countries, now has 8,500 applications in the company's App Store, and there have been more than 35 million downloads of iPad apps so far, he said.
Reuters and The Associated Press also contributed to this report.