The battle in the smart-phone market — the hottest niche in personal technology — got tougher Monday as Apple unveiled a faster iPhone, a next-generation operating system and cut the price of the current model.
Cupertino-based Apple, kicking off a San Francisco gathering of independent developers who write software for its products, also signaled it has its eye on recession-pinched wallets by announcing it was cutting the prices of several of its laptops while also giving them upgrades.
The announcements come as Apple, the innovation pacesetter in the smart-phone business, faces fiercer competition from other companies vying to dominate an area of technology that's playing an ever-larger role in people's day-to-day lives. More and more, people rely on their phones for everything from portable entertainment centers to digital maps that give directions to restaurants. The latest threat Apple must counter comes from Sunnyvale's Palm, which just released its Pre smart-phone to winning reviews.
"The iPhone — we can't really call it a phone," said developer Adam Schechter with Connecticut-based Precision Consulting. "It's a platform."
The new phone — called the iPhone 3G S — is two to three times faster than the current version and includes video capability with simple editing and sharing functions, voice control and a digital compass. It will also have a longer battery life, the company said.
On June 19, the Cupertino company will begin selling two new models — 16 and 32 gigabytes — for $199 and $299, respectively, for new and eligible current customers with a contract from its U.S. carrier partner, AT&T.
At the same time, Apple cut the price of the older 8GB model, which will sell for $99.
"We really hope this opens the market up even more," said Apple Vice President Phil Schiller, the featured speaker. It was widely rumored that CEO Steve Jobs, who at the end of this month completes a six-month sick leave, would make a surprise appearance at the gathering but that didn't happen.
The company also announced it would release its latest Macintosh operating system, Snow Leopard, in September for just $29. Prices on its laptops are dropping as much as 15 percent.
While Apple strives to outpace smart-phone competitors, from Research In Motion's BlackBerry to Palm's just-released Pre, phone service providers will also be feeling pressure, said Shiv Bakhshi, analyst with mobilePerspectives.
"The demand for more bandwidth will be great," he said. "More of us will use more apps. You will be able to do 50 other things and the iPhone will be more affordable. Cumulatively, that will create a bandwidth crunch for the operators. This is creating a challenge for the carriers to keep up with Apple."
Already, there are questions about when AT&T will support one of the iPhone's advances.
IPhone 3.0 will come with a "tethering" ability, which will allow users to connect — wirelessly or through a cable — their phone to their Mac or PC laptop to access the Internet over the cellular network. It will be available with 22 carriers in 42 countries. When Scott Forstall, vice president of iPhone software, said the tethering capability would be rolled out "later" in the United States, the crowd hissed. AT&T has not announced when it will support it.
"They are going to be under great pressure to support tethering," Creative Strategies President Tim Bajarin said of AT&T.
On June 17, Apple will roll out iPhone 3.0, its new operating system for the device. That will also allow for faster Web page loading, which will enable better video and audio streaming, according to Forstall. "It just screams," he said.
A new function, which works with Apple's MobileMe online service, allows users to locate a lost iPhone — on a map or by making a beeping sound. It also lets them erase all the data on the device remotely. They can later restore the information through iTunes.
Forstall also announced a new service that allows users to rent and buy movies, TV shows and music videos from the company's online iTunes store with their iPhone.
He also reviewed some of the previously announced new features of the new iPhone 3.0 operating system, including cut-copy-and-paste, additional parental controls, the ability to send multimedia messages and a spotlight function that allows users to search across applications, from e-mail to music.
Speaking to hundreds of independent iPhone software writers, Forstall also talked about some of the new capabilities the iPhone developers kit will give independent software writers. InApp Purchase will let them sell products through individual applications — such as magazine subscriptions or new packs for games. Developers can also write software that can turn an iPhone into a medical monitor, providing, for example, such data as a diabetic patient's glucose levels and information about how much insulin is needed.
The App Store, which now offers some 50,000 applications for the iPhone, crossed the 1 billion app download mark in April. The applications run on the 40 million iPhones and iPod Touch devices that have so far been sold.
While much of what was announced Monday had been anticipated, it was nonetheless a love fest between software developers and Apple.
"Apple has won the hearts and minds of developers," said Ge Wang, the Stanford University assistant professor and cofounder of Smule. The Menlo Park iPhone apps development startup created Ocarina, a virtual flute. "It's such a symbiotic relationship."
