Reporting from San Francisco — Apple Inc. today unveiled the iPhone 3GS, a new, lower-priced version of its runaway hit that can shoot videos, has a longer battery life and runs an upgraded operating system with 100 new features.
The phone is expected to hit store shelves later this month and cost $199 to $299 for new AT&T Inc. customers who sign up for a two-year contract. The existing iPhone 3G drops to $99 for new AT&T subscribers.
The iPhone will continue to be available only on AT&T's cellular network, which initially won't be able to support some of the key new features, including the ability to use photos and video in text messages and the ability of a user to link the phone's Internet connection to a laptop.
Attendees at the Cupertino, Calif., company's annual World Wide Developers Conference at the Moscone Center jeered at the mention of AT&T, expressing a long-held frustration that the popular phone is not available from other carriers. But they cheered the litany of new features, which Apple vowed would accelerate the company's momentum in the smart-phone market.
"Today was a big win for Apple," said analyst Michael Gartenberg, vice president for strategy and analysis at Interpret, a technology research firm. "Apple raised the bar in terms of functionality, price and value."
Gartenberg, who called the iPhone the "king of the smart phones," said the $99 price was "extremely disruptive" because it would bring the device within reach of a wider range of consumers.
Apple has sold more than 40 million iPhones and iPod Touches, which do many of the same things as the iPhone except make phone calls, said Scott Sorstall, senior vice president for iPhone software.
Through its iTunes online store, Apple offers more than 50,000 applications for its iPhones and iPod Touches. These bite-sized software programs have been downloaded more than 1 billion times, Apple said.
The network of developers who make most of these applications is one of the key weapons in Apple's arsenal to stave off rivals, including BlackBerry maker Research in Motion, cellphone giant Nokia and Palm Inc., which last week unveiled the Pre smart phone to largely favorable reviews.
Developers in the crowd seemed to love Apple's new features, applauding each announcement. Although Apple Chief Executive Steve Jobs, who usually unveils new products, was not present -- he is on medical leave until the end of the month -- Philip Schiller, Apple's senior vice president of worldwide product marketing, who delivered the event's keynote, offered up Jobsian hyperbole, calling the phone "incredible."
Schiller also announced a new version of Apple's OS X operating system, dubbed Snow Leopard, and new versions of and prices for the popular MacBook laptop computers. Upgrades for existing Mac users to the new operating system will cost $29, and the slimmest MacBook Pro will start at $1,199 -- both low prices for Apple.
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