Apple chief executive Steve Jobs, unveiled a less expensive, faster and more powerful iPhone, almost a year after the original device helped spark a surge of interest in smart phones and positioned Apple as a leading player in the field.
The new model fixes some of the most glaring shortcomings of the iPhone, which brought Apple's renowned simplicity and functionality to mobile phones. Analysts said the announcements signalled Apple's intention to challenge Nokia for supremacy in the mobile phone market.
Most importantly the iPhone2.0 as Jobs called it, runs on 3G mobile networks rather than the slower Edge networks, and will sell for $199 for an 8GB device and $299 for a 16GB model. The original 8GB device sold for $599 when it went on sale last year. The new model will go on sale on July 11.
In addition to 3G capabilities, the new model also offers GPS location tracking, and is slightly thinner, has a full plastic back, solid metal buttons, 3.5-inch (9-centimetre) display, improved battery life, camera, a flush headphone jack and improved audio.
Speaking at Apple's World Wide Developer Conference, Jobs announced a slew of new applications for the iPhone, including a wireless system that automatically forwards e-mail to other devices, a friend-finding service called Loopt and mobile blogging software from TypePad. Another application called Cow Terry allows users to easily create songs on the phone.
Apple has sold more than 6 million units since the phone's debut and has the stated aim of selling 10 million units by the end of the year. Hoping to achieve and even surpass that goal, Jobs also announced a major push into the enterprise market where it hopes to take on the market leader, RIM's Blackberry with support for enterprise email and virtual private networks.
Jobs also said the new iPhone will be made available in more than 70 countries in the coming months, including virtually all of Latin American, Hong Kong, the Philippines, Britain, Ireland and many African countries, but not China or Russia.
Analysts said that the price cut and increased functionality reflected Apple's strategy to broaden the iPhone's market.
"With these announcements today, (Apple is) making a statement they want to overtake Nokia," said analyst Ken Dulaney of Gartner.
"Price is the big surprise," said another Gartner analysts Mike McGuire. "If anyone needed proof that Apple wanted to go after a broader market, they have it now."