Apple

No Steve Jobs, But Cheaper iPhones


Steve Jobs didn't appear, but an iPhone chock full of new features and a new MacBooks—soon to sport a spanking new operating system—went on display at Apple's (AAPL) World Wide Developers Conference in San Francisco on June 8.

Speaking for two hours before a crowd made up mostly of software developers, Apple executives—including Phil Schiller, vice-president for worldwide marketing; Scott Forstall, vice-president for iPhone software; and Bertrand Serlet, vice-president for software engineering—laid out an aggressive slate of product upgrades and introductions, starting with the debut of the iPhone 3GS on June 19. The S, the company said, stands for speed. Among its new features are chips for faster 3G wireless connection speeds using a technology known as HSDPA that is capable of running as fast at 7.2 megabits per second. The new phone can also capture video and boasts an improved capability for taking still pictures. The iPhone GS will hit the market with data capacities of 16 and 32 GB, priced at $199 and $299.

Meanwhile, Apple is cutting the price of the current iPhone model, the iPhone 3G, from $199 to $99 for an 8-GB version.

Along with the new phone comes an update to the iPhone's operating system. Among its many new features is the ability to initiate transactions within an application. This will be especially popular among game developers, but others will take advantage of it as well. One company, Scrollmotion, said it will offer 1 million books for download, including textbooks, plus 50 magazines and 170 daily newspapers, thus putting the iPhone and iPod touch in competition with Amazon's Kindle digital reader.

Apple's U.S. iPhone partner AT&T (T) drew some criticism at the Apple conference. One major new feature, Multi-Media Messaging (MMS), is coming with the new iPhone software, but AT&T won't support it until September. An additional new feature known as tethering, which allows a mobile phone to be used like a modem when connected to a notebook PC, appears not to have support from AT&T, either, as its name did not appear on a slide listing those wireless carriers around the world that are supporting it. AT&T didn't immediately comment.

bad timing for palm and sprint

The release came only three days after Palm (PALM) released its long-awaited Palm Pre smartphone on Sprint's wireless network. The price cut on Apple's lower-end iPhone model, coupled with the forthcoming features of the new operating system, can't help but place Palm in a difficult competitive stance for the time being. Palm stock fell 84¢, or more than 6%, to close at 12.16. Apple stock fell 82¢, to 143.85.

The day wasn't entirely about the iPhone. Apple announced updates to its MacBook Pro line of notebook computers. Its 15-inch MacBook Pro has improved display technology, a faster Intel processor, and the addition of a slot for SD memory cards. The 15-inch model also has a lower starting price of $1,699. Apple updated its $2,499 17-inch MacBook Pro as well and its 13-inch MacBook models, changing the branding on the latter to MacBook Pro, with a starting price of $1,199. The ultra-thin MacBook Air was also updated with new Intel processors and larger storage capacities and will start at $1,499.

Apple also demonstrated Snow Leopard, the next iteration of its Mac OS X operating system software, which will hit store shelves in September at a price of $29 for those who own the current version of the OS and $169 for those upgrading from an older version.

Rumors had suggested that Jobs, Apple's longtime CEO, who often takes the stage at events such as the developer's conference, might appear in some capacity. The company has maintained that Jobs, who has been on medical leave since January, is on course to return to work at the end of June.

Hesseldahl is a reporter for BusinessWeek.com.


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