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.