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iPhone Gets 3G, $200 Price Cut

6/09/2008 03:43:00 PM Eastern

San Francisco — Apple’s new 3G iPhone adds GPS navigation, high-speed downlink packet access (HSDPA) cellular data and compatibility with hundreds of third-party programs though its 2.0 software, at a retail price that’s $200 cheaper than the current iPhone.

CEO Steve Jobs made the announcement at the Worldwide Apple Developers Conference, here, saying the iPhone 3G will be available July 11 in the United States at a suggested retail of $199 for the 8GB model and $299 for the 16GB model, with two-year contract, through Apple and AT&T stores.

Unlimited iPhone 3G data plans for consumers will be available for $30/month, in addition to voice plans starting at $39.99/month, the carrier said. Unlimited 3G data plans for business users will be available for $45/month on top of a voice plan.

AT&T Mobility will remain the exclusive U.S. carrier for the iPhone, but unlike before, the carrier will subsidize handset prices as carriers traditionally do. In addition, AT&T will no longer share monthly revenue from its iPhone subscribers with Apple. “Under the revised agreement, which is consistent with traditional equipment manufacturer-carrier arrangements, there is no revenue sharing, and both iPhone 3G models will be offered at attractive prices to broaden the market potential and accelerate subscriber volumes,” AT&T said in a statement.

Apple's iPhone 3GBecause of the subsidy, however, AT&T said in the near term, it “anticipates that the new agreement will likely result in some pressure on margins and earnings, reflecting the costs of subsidized device pricing, which, in turn, is expected to drive increased subscriber volumes.”

iPhone 2.0 software, which will be available on July 11 as a free software update for current iPhone owners, includes support for Microsoft Exchange ActiveSync and other enterprise-oriented applications. It also runs “hundreds” of third-party applications already built by software developers using the recently released iPhone SDK, Apple said.

Also on July 11, iPhone 3G will be available in 21 other countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom Later this year, the iPhone 3G distribution will spread to more than 70 countries total.

With HSDPA technology, the iPhone 3G delivers simultaneous wireless voice and data, enabling users to browse the Web or check email while making a phone call. The iPhone 3G automatically switches between cellular HSDPA, slower cellular EDGE and Wi-Fi to deliver the fastest available download speeds.

Although data speeds jump over AT&T’s W-CDMA HSDPA network, talktime drops to five hours compared to talktime over AT&T’s GSM/EDGE network, which provides 10 hours of talktime to the phone. The first-generation iPhones delivered eight hours of GSM/EDGE talktime. Up to five to six hours of Web browsing are possible, along with up to seven hours for video playback and up to 24 hours for audio playback.

The phone operates is HSDPA mode in AT&T’s 850/1900MHz network and in overseas 2100MHs networks. Quadband EDGE also operates in U.S. and foreign markets.

Out of the box, the iPhone 2.0 software supports Microsoft Exchange ActiveSync to provide over-the-air push email, contact and calendar syncing. It also supports remote wipe and Cisco IPsec VPN for encrypted access to corporate networks.

The iPhone 3G also lets users access Apple’s new App Store via Wi-Fi or cellular, providing users with native applications in such categories as games, business, news, sports, health, reference and travel. The App Store on iPhone works over cellular networks and Wi-Fi. Some applications are free. The App Store will be available in 62 countries at launch.

Other iPhone 3G features include real-time mapping via GPS, mass move and delete of multiple email messages, search for contacts, a new scientific calculator and parental control restrictions.

The iPhone 3G also takes advantage of MobileMe, a new service that pushes email, contacts, and calendars to iPhones, the iPod Touch, Macs and PCs. Messages are pushed instantly to iPhones, making it unnecessary to manually check email and wait for downloads. The service keeps contacts and calendars continuously up to date so changes made on one device are automatically updated on other devices.