iPhone promises more for less
Apple fans will soon get GPS technology and fast third-generation networking
SAN FRANCISCO - One year after its much-hyped debut, Apple Inc.'s popular iPhone is getting a face lift and a major price cut.
When it goes on sale July 11, the new iPhone 3G will cost as little as $199 with a two-year cellular service contract from its exclusive US distributor, AT&T Inc. That's way down from the $499 minimum price for the original iPhone, which went on sale last June.
"We think the iPhone 3G will be affordable for just about everyone," said Apple's chief executive, Steve Jobs, who described the new phone to thousands of Apple software developers meeting at San Francisco's Moscone Center yesterday.
AT&T will offer service plans for as low as $39.95 a month for voice calling, compared with the $59.95 minimum plan offered with the original iPhone. The $59.95 plan provides 450 minutes of talk time, but AT&T has not revealed how many minutes will be provided for $39.95. The price for transmitting data over the iPhone 3G will increase to $30 a month, up $10.
"It's a slightly higher data plan because we're expecting there'll be higher data usage on the 3G iPhone," said AT&T spokeswoman Kate MacKinnon.
Indeed, the iPhone 3G was renamed to promote its new "3G," for third generation, wireless networking system, which can send and receive data much faster than the current iPhone. Jobs demonstrated by downloading a Web page in one-third the time needed with the original iPhone, which uses a slower networking system called EDGE.
Also included in the iPhone 3G is Global Positioning System technology, which lets the phone act as a personal navigation device.
Still, the new iPhone isn't nearly as groundbreaking as last year's model. GPS and 3G networking are already available in many other phones, and Apple was widely criticized last year for leaving them out of the first iPhone. Some industry experts had predicted more extreme upgrades for the new phone, including the ability to broadcast live video over the Internet.
Most of yesterday's two-hour presentation focused on iPhone software rather than hardware. Jobs touted iPhone 2.0, a new version of the phone's software that will make it compatible with Microsoft Corp.'s Exchange messaging service, while adding virtual private networking support from Cisco Systems Inc.
Jobs said those two features will help the iPhone gain acceptance in large corporations and government agencies, a market now dominated by rival "smartphones" that use Research In Motion Ltd.'s BlackBerry software, the Symbian operating system, or Microsoft's Windows Mobile software.
IPhone 2.0 will also add upgraded features for consumers, like the ability to easily search for names in the phone's address book and improved support for languages like Japanese and Chinese. The 2.0 software will run on existing iPhones and will be available for free download in early July.
A version for Apple's iPod Touch music player will cost $9.95.
Jobs also provided more details about Apple's efforts to let outside software developers write and sell programs to run on the iPhone. Programmers showed off applications ranging from video games to a medical program that displayed moving three-dimensional images of the human body. Apple plans to open an online store to sell iPhone software, with the company keeping 30 percent of the revenue from each sale.
Apple also said it will replace its .Mac online service with a new product called Mobile Me, which will let users store their e-mails, appointments, and address books on the Internet, and have updates automatically sent to their iPhones and computers. Mobile Me will cost $99 a year and could boost the iPhone's popularity by integrating it with users' other computing devices.
Ken Dulaney, who tracks mobile technology for the research firm Gartner Inc., in San Jose, Calif., said the array of new software and hardware shows Apple's determination to dominate the smartphone market.
"They made the statement that they want to be the number one cellphone provider in the world," he said.
But Dulaney said Apple has a long way to go before it can compete with Research In Motion or Microsoft in corporate accounts. It's also far behind industry leader Nokia, which sold 435 million phones last year. Apple has sold just 6 million iPhones so far, and hopes to reach 10 million this year.
Hiawatha Bray can be reached at bray@globe.com. 