Apple unveils new iPhone

Faster model slated to go on sale June 19. Current iPhone price drops to $99. Steve Jobs is a no-show at developers conference.

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By David Goldman, staff writer


NEW YORK ( -- Apple on Monday unveiled a new, faster iPhone, lowered the price on its existing model to $99, and released details of its revamped operating system.

But Apple (AAPL, Fortune 500) CEO Steve Jobs did not appear at the company's World Wide Developers Conference in San Francisco, where the company presented its products.

Instead, Philip Schiller, the company's senior vice president of worldwide product marketing, demonstrated the new iPhone 3G S, which can perform tasks up to 3.6 times faster than the previous second-generation iPhone, the iPhone 3G.

Apple shares, which were down as much as $5.24 earlier, were $2.07 lower at $142.60 after the presentation. They ended the day down 82 cents, at $143.85.

The iPhone will come in three sizes and prices. The new phone will have a 16-gigabyte model for $199 and a 32-gigibyte version for $299. Apple will continue to sell a second-generation iPhone 3G with 8 gigabytes of memory for $99 -- the cheapest price yet for the device.

The prices are subsidized by AT&T (T, Fortune 500), the exclusive wireless carrier for the phone, for customers signing new contracts.

The new phone also comes with a 3-megapixel camera with video capturing and editing capabilities, improved battery life with up to 12 hours of talk time and 30 hours of audio, voice-command control by holding down the home button, and a built-in digital compass.

IPhone OS: Apple also demonstrated its new operating system for the iPhone, days after after competitor Palm (PALM) launched its much-ballyhooed Pre phone.

The new iPhone OS 3.0, which was first unveiled in March, will have cut, copy and paste capabilities for all applications, which iPhone users have long demanded. The operating system will also feature an undo gesture, which will undo the last action by shaking the phone.

"Apple's in a different environment now than when they launched the iPhone, because there are multiple dealers with better offerings," said Edward Zabitzky, Apple analyst with ACI Research. "Apple really didn't change the platform very much, but the net result is that they made themselves more competitive."

Fully integrated search, multimedia text messages and auto-fill for passwords have also been added to the iPhone, though the multimedia text messaging will not be available on AT&T (T, Fortune 500) until later in the summer.

The new OS will allow users to rent and purchase movies right from their phones using iTunes, and it will have parental control functionality.

Snow Leopard: Apple said its new operating system, Snow Leopard, will be available in September and can perform some tasks up to 90% faster than the current Leopard OS. Apple said Snow Leopard is more crash resistant than its predecessor and is 6GB smaller.

Rival Microsoft (MSFT, Fortune 500) has said its new Windows 7 operating system will be unveiled in October.

Snow Leopard will cost $29 to upgrade from Leopard, which is $100 less than Apple's previous upgrade price.

Apple also unveiled a new, faster Safari Web browser. Safari 4 can track changes in many of the most frequently visited Web sites, and uses the iTunes "cover flow" interaction to scan through browser history.

The company redesigned its Quicktime video viewer and editor, giving users the ability to share video on YouTube, MobileMe or iTunes, which enables playback on the iPhone.

New MacBooks: The new 13-inch and 15-inch MacBook Pros will both showcase a 3.06 GHz Intel Core Duo processor, the fastest processor Apple has ever used.

Like the larger 17-inch MacBook Pro, the 15-inch will also feature a new lithium battery that gets up to seven hours of battery life and three times the recharges of most laptops.

The company announced the MacBook air will cost $1,499, a $700 price cut. A 13-inch MacBook Pro will cost $100 less at $1,199, and the the 15-inch and 17-inch MacBook Pros will be $300 less expensive at $1,699 and $2,499, respectively.

The company did not offer a low-priced netbook, as some had expected, but analysts cheered the move.

"They shouldn't compete in the netbook world, because it would diminish the value of their brand," said Zabitzky. "It would be very foolish for Apple to go after short-term gains for long-term pain."

Jobs, who has been on leave because of illness, is expected to return to work at the end of the month.

-- Fortune's Philip Elmer-DeWitt contributed to this story To top of page

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