Apple announces faster, cheaper iPhone

http://money.cnn.com/2008/06/09/technology/applekeynote.fortune/index.htm?postversion=2008061009

CEO Steve Jobs unveils the much-anticipated 3G iPhone; cuts the iPhone price to $200; takes aim at the BlackBerry.

By Scott Moritz, writer


NEW YORK (Fortune) -- Apple announced on Monday a much faster iPhone that's half the price of the current model.

The news is expected to address one of the biggest complaints about the hugely popular iPhone: That its Internet browsing is too slow. CEO Steve Jobs said the new iPhone, which is based on 3G technology, is 36% faster than top rival Nokia's N95 smartphone.

As Fortune.com first reported, the new 8-gigabyte iPhone will cost $199 and a 16-gigabyte version will cost $299. Jobs says the new iPhone will be available worldwide starting July 11. It will allow up to six hours of Web browsing and five hours of talk time.

Jobs announced the 3G iPhone, which had been rumored for months, at the company's annual World Wide Developers conference in San Francisco.

Apple shares fell 4% after the iPhone announcement, as some investors were left wanting more from the gadget maker. The stock had been up 55% in the past three months on heightened expectations for a radically improved iPhone and the possibility of other product launches.

While the price cut was good news for consumers, U.S. iPhone partner AT&T (T, Fortune 500) said it would feel the pinch of having to lay out a subsidy for the new phone. In a press release late Monday, AT&T said the iPhone costs will cut adjusted earnings by about 11 cents this year and next.

To help offset the expected revenue shortfall, AT&T raised the price of its unlimited iPhone data plan by $10 a month. Also, as part of its new business model, Apple will no longer pocket a share of customer fees. However, AT&T will continue to pay Apple as much as 24% of monthly revenue from original iPhone users until their contracts expire.