SAN FRANCISCO - Apple Inc. unveiled an upgraded iPhone yesterday with a faster Internet connection and satellite navigation capabilities - priced $200 lower than current models, but with more expensive service.

Analysts have said Apple needed to slash the multimedia gadget's price and upgrade it to work over so-called 3G, or third-generation, wireless networks to hit the company's target of selling 10 million iPhones by the end of 2008.

An 8 gigabyte model is to sell for $199 starting July 11. A 16 gigabyte model will cost $299. The devices are to roll out initially in 22 countries.

Apple has inked deals for wireless carriers in 70 countries to carry the new iPhone.

AT&T Inc., the exclusive U.S. carrier for the phone, said its plans for the phone will start at $39.99 per month, plus $30 for unlimited data. That works out to be a $10 increase from the cheapest plan for the first-generation iPhone.

AT&T also warned of an earnings hit due to the pricing, pointing to carrier subsidies as the reason for the price cut rather than a price reduction from Apple.

And Apple said in a regulatory filing that under most of its new carrier agreements, it will not receive a share of subscribers' monthly service fees.

Apple's participation in the cell-phone market has been hurt by complaints about the year-old iPhone's data-download speeds, which can make simple tasks like sending pictures over e-mail or downloading Internet videos painfully slow.

Apple said the 3G iPhone downloads data twice as fast the old one.

Apple Chief Executive Steve Jobs said that when the original iPhone was designed, the chips used on the faster network sapped too much battery life and were too bulky. The company decided to wait to improve the device until better chip technology emerged that could fit the iPhone's slim design. *