- The Washington Times - Tuesday, June 10, 2008

SAN FRANCISCO | Apple Inc. on Monday unveiled the next-generation iPhone with faster Internet access that will run on advanced wireless networks and sell for as low as $199 - half the current entry-level price.

Shares of Apple, after strong recent gains partly driven by anticipation of the new iPhone, fell 2.2 percent after Chief Executive Steve Jobs indicated the company was going after the mass market with the new model.

“It changes the game for all smart-phone makers,” Tim Bajarin, head ofSeattle consultant Creative Strategies, said of the price and new features.

The new phone also marks a dramatic departure for how Apple will make money in its third major business alongside Macintosh computers and iPod media players.

Wireless network companies will no longer pay Apple part of the subscription fees they get from iPhone users, but instead will subsidize the devices up front to make them cheaper.

“The vast majority of agreements we have reached do not have those follow-on payments, so you can conclude that the vast majority of carriers do provide subsidies for the phone,” Tim Cook, Apple’s chief operating officer, told Reuters.

“It’s amazingly zippy,” Mr. Jobs said, showing off the encore to a device that melds a mobile phone, iPod media player and Web browser, nearly a year after the original went on sale.

The new iPhone, which looks similar to the old one but with glossy black or white plastic in place of a metal back cover, loads Internet pages about 2.8 times faster than the original, he said.

An entry-level version of the new iPhone, with 8 gigabytes of memory, will cost $199, versus $399 for an older-generation iPhone with similar memory. A version of the new iPhone with twice the memory will cost $299. Both will go on sale in 22 countries July 11.

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