Apple details 3G iPhone

RCR Wireless News
SAN FRANCISCO — You could cut the anticipation with a knife leading up to Apple Inc.’s Worldwide Developer Conference this morning. The company delivered the iPhone 3G to thunderous applause more than 75 minutes into a nearly two-hour presentation.

The sold-out event brought 5,200 people to the company’s annual gathering for developers and kicked off with details about the iPhone 2.0 software, App Store and 11 new application demonstrations from developers.

“I think it’s widely believed that this is the phone that changed phones forever,” CEO Steve Jobs said.

Calling the iPhone “one of the most amazing products I’ve ever had the pleasure of being involved with,” Jobs checked off five major areas that Apple was pressed to improve on — 3G support, GPS functions, enterprise features, third-party applications, more scale and a lower price — and he said the company delivered on each with the new device. The 3G iPhone is scheduled to launch in 22 countries on July 11.

“We did figure out what our next challenges are, the next mountain we have to climb to go to the next level,” Jobs said. Although 6 million iPhones have been sold thus far, Jobs said the price must drop before reaching greater scale.

“We need to make the iPhone more affordable,” he said. Apple hopes to sell 10 million iPhones by year’s end. The company currently commands a 2.6% share of the handset market in the United States and 0.6% worldwide, according to Strategy Analytics.

The lower price

The 3G, 8GB iPhone will sell for $200 in the United States, with the more spacious 16 GB model priced at $299 — both with a 2-year contract at AT&T Mobility. (The first-generation iPhone continues to be listed on the AT&T Mobility site at $399 for the 8GB model and $499 for the 16GB model, though both are tagged as “temporarily out of stock.”) The pricing likely comes as bad news for handset vendors trying to catch up with the first generation of the device.

Further, the new pricing indicates a new business model for Apple and AT&T Mobility.

“The new agreement between Apple and AT&T Mobility eliminates the revenue-sharing model under which the carrier shared a portion of monthly service revenue with Apple,” AT&T said in a statement. “Under the revised agreement, which is consistent with traditional equipment manufacturer-carrier arrangements, there is no revenue sharing and both iPhone 3G models will be offered at attractive prices to broaden the market potential and accelerate subscriber volumes.”

AT&T Mobility said it expects iPhone subsidies to dilute its earnings per share by 10 cents to 12 cents through the end of next year. The carrier said things will then turn around in 2010.

AT&T said unlimited iPhone 3G data plans for consumers will be available for $30 a month, in addition to voice plans starting at $40 a month. Business users will pay $45 per month for data, in addition to a voice plan.

Click here for more details on AT&T’s plans for the 3G iPhone.

The developers

Scott Forstall, senior VP of iPhone software, introduced 11 different engineers that each has developed applications that will be available through Apple’s iPhone App Store at launch or shortly after. Sega, eBay, Loopt, TypePad, Associated Press, Pangea Software, Cow Music, MLB.com, Modality, MIMvista and Digital Legends Entertainment all showcased their applications built for the device to varying levels of “oohs” and “ahhs” from the crowd.

“We’ve developed for nearly every mobile platform; this one is the best,” Loopt’s Sam Altman said. “We think this is a new era in mobile.”

Apple’s Forstall also introduced a new feature that allows iPhone users to receive notifications of changes on an application even when the user isn’t actively using the application. Instant messaging messages and more will be made available through a new Apple Push Notification Service that maintains one consistent link with the device, rather than requiring multiple applications to run in the background.

Click here for more details on forthcoming iPhone applications.

The specs

During his presentation, Jobs showed off the iPhone’s performance over a Wi-Fi hotspot, a 3G network and an EDGE connection. The new device pulled up NationalGeographic.com over 3G in 21 seconds and took 59 seconds on the EDGE network. Wi-Fi clocked the site in at 19 seconds. “You can see that the 3G speeds are actually approaching Wi-Fi,” Jobs said.

The “3G” aspect of the new iPhone calls out the device’s tri-band HSDPA support in the 850/1900/2100 MHz bands in addition to its quad-band GSM/GPRS/EDGE support from the previous model. (No word in Apple’s press release about support for HSUPA technology, which AT&T Mobility has baked into its recent network upgrades.) Apple claims the device will have 10 hours of talk time in GSM mode and 5 hours of talk time in UMTS mode. The device continues to include Wi-Fi capabilities as well inside its new, slimmer profile.

Speaking of aesthetics, the 3G iPhone will now come in two colors: black for both models and white for the 16GB model. The new colors are rendered in plastic that will replace the previous models’ aluminum casing.

The new device also includes assisted GPS technology and Bluetooth 2.0, which were both lacking in the original model. The GPS functionality was central to several new applications that were presented during the event that also highlighted new applications developed for the iPhone platform through its software development kit.

Apple also touted the new device’s support for enterprise applications, as well as Apple’s new MobileMe service that pushes e-mail, contacts and calendar events from a central Apple server to the iPhone. The MobileMe service is set to replace Apple’s previous .mac service.

Other “improvements” to the device include a flush headphone jack and the inclusion of a “SIM ejector tool.”