Jobs takes wraps off faster iPhone

Apple Inc Chief Executive Officer Steve Jobs delivered the first major makeover of the iPhone, unveiling a faster, cheaper handset that may help him convince business users to switch over from the BlackBerry.

Apple sank 2.2 percent in NASDAQ trading after announcing that carriers won't have to give the company a cut of the lucrative monthly service fees from the new third-generation phones.

Jobs is seeking to make the iPhone more mainstream, lowering the price on one model to $199 from $399 and adding programs for the business users who have made Research In Motion Ltd's BlackBerry the top-selling Web-surfing handset in the United States.

"The main restriction was price, and they've taken that away," said Hakim Kriout, an analyst at municipal bond trading and underwriting firm Grigsby & Associates in New York. "At that level, Apple can sell more iPhones, which will compensate for the loss of revenue sharing."

Apple, based in Cupertino, California, fell $4.03 to $181.61 at 4 pm New York time on the NASDAQ Stock Market. Before yesterday, the shares had surged 56 percent after dropping to a low this year of $119.15 in February on concern an economic slowdown in the US would depress sales of iPhones and iPod media players.

The new, thinner phone will go on sale in 22 countries on July 11 and run on third-generation, or 3G, wireless networks that deliver Internet content at least two times faster than the prior model, Jobs said at Apple's developer conference in San Francisco.

AT&T subsidy

AT&T Inc will subsidize the cost of the handset in the US, where it's the exclusive iPhone carrier. In a regulatory filing, Apple said it won't get payments from carriers for the new phone beyond the original purchase price. The company will still get a cut of revenue from older models running on authorized networks.

"Wireless service providers are offering subsidies, so it sounds like Apple is giving up a share of the revenue in exchange for that," David Garrity, an analyst with Dinosaur Securities Inc, said in an interview from New York.

The iPhone went on sale last June, and Apple sold 6 million before running out in May, said Jobs. The company moved 700,000 in the current quarter, which ends this month. Chief Operating Officer Tim Cook reiterated the company's goal of shipping 10 million this year, more than double the number in 2007.

The new model, which eventually will be available in 70 markets, has a 8.9-centimeter touch screen and built-in global positioning technology. The black, 8-gigabyte version will cost $199; the 16-gigbyte model, available in white or black, will sell for $299.

"$199 is right in the sweet spot of where we are seeing pricing going in the smart-phone market," Ross Rubin, an analyst at NPD Group in New York, said. "The giveback on carrier subsidies isn't that much of a concern. They need to build a base for developers."

Jobs introduced the new phone in tandem with revamped software, including the $99-a-year MobileMe service, which offers e-mail forwarding, and automatic calendar and contact updates.

Thirty-five percent of Fortune magazine's 500 biggest US companies have tested new iPhone software, he said.

"Everything they told us they wanted, we have built right into iPhone 2.0 software out of the box," Jobs said.

Testers included News Corp's Fox Interactive Media, Walt Disney Co, the US Army and Genentech Inc. Also, 4,000 software developers have been admitted to the iPhone developer program, Jobs said.

The business software, announced in March, will also have added security functions and support Microsoft Corp's Exchange message system, the most popular program used by corporate e-mail users.

Agencies

(China Daily 06/11/2008 page16)