Steven P. Jobs, chief executive of Apple, introduced a new cheaper iPhone model last week that navigates the Internet more quickly, expanded its distribution overseas and displayed a range of new applications and services to establish Apple as a major player in the cell phone industry.

Apple, the maker of consumer electronics and computer equipment, had set a goal of selling 10 million iPhones this year, which would establish it as one of the major smartphone makers in less than two years since it began shipping the original iPhone. Apple has sold six million phones globally since its introduction.

Analysts said Jobs, one of the world’s best product marketers, had largely accomplished what he set out to do and they welcomed the moves he outlined in a presentation before software developers last Monday.

“This is the phone that has changed phones forever,” Jobs said.

He said the new iPhone 3G, to be available in the United States through AT&T beginning July 11, will sell for US$199 (RM655) for the eight-gigabyte model and US$299 for the 16GB model. He pointed out that the biggest barrier to people buying the phone had been price.

Analysts and industry executives said they believed the lower prices would bring in new consumers who had been put off by the iPhone’s US$399 price. “The price is clearly correct,” said Mike McGuire, a research vice president at Gartner, a market research firm based in Stamford, Connecticut.

As widely anticipated, the phone will run on so-called third-generation wireless networks that allow much faster Internet connections than the original iPhone. During a 110-minute presentation, Jobs went to some lengths to compare the speed of the new iPhone 3G to the current phone and rival phones like the Nokia N95 and Palm Treo 750. He called downloads “amazingly zippy”.

The phone, sleeker than the original, will also have built-in global positioning system capability to allow location-based services. It will also have a longer battery life in some cases, five hours for talking on the 3G network and 24 hours for playing music on the phone.

The announcements came on the opening day of Apple’s Worldwide Developers Conference, where several developers showed off software that turned the iPhone into a game console and a musical instrument. Others demonstrated programs that used the phone’s ability to locate its users on a map.

At one point during his demonstration, Jobs showed a tracking feature, making it possible to watch on a Google map as an iPhone user drove down Lombard Street, the twisty tourist attraction in San Francisco.

Jobs also indirectly challenged Microsoft with a mobile Web service call MobileMe, intended to permit a user to synchronise a phone, calendar and contact information on the iPhone and multiple devices, including PCs and other iPhones. The service, which costs US$99 a year and comes with 20GB of data storage, is similar to a service offered by Microsoft.

Apple’s obstacle in offering the new service is that its competitors, like Google, offer similar services for less. Google offers 10GB of e-mail storage for US$20 a year.

Apple announced that it would begin selling the iPhone in 70 countries this summer; the current phone is being sold in six countries.

“Given the feature set, ecosystem partners, launch countries and the pricing of the iPhone, they are likely to hit the 10 million mark between September and October,” said Chetan Sharma, an independent consultant on the wireless data communications industry.

The company, based in Cupertino, California, announced last week in a regulatory filing that it would sell the 3G phones under different business arrangements in the US. In the past, Apple shared service plan revenue with AT&T and other cellular firms. The second-generation iPhone will be sold without the recurring revenue streams and without the exclusivity arrangements it was previously able to command.

“We have changed our business model, from getting a cut of the future revenues to just a more traditional model,” Jobs said. “That’s enabled us to roll out around the world much faster.”

By giving back the revenue to the carriers, which they may use for subsidies, Apple is hoping to dramatically increase its volume as well as sell more Mac computers to iPhone users.

“It’s not about the iPhone,” said Charles Wolf, a financial analyst at Needham & Co. “There’s a trade-off that Apple is making. The iPhone halo effect will be far more powerful than the iPod halo effect was. It’s going to stimulate Mac sales among iPhone users.” – NYT