How do you maintain interest in an iconic product that has already sold millions? Simple – you make it even better and even cheaper. Apple CEO Steve Jobs showed his commitment towards this winning marketing principle by unveiling the latest 3G avatar of the bestseller iPhone at its weeklong Worldwide Developer Conference (WWDC) in San Francisco, California.
In front of an audience reminiscent of rock star concerts, Jobs and his team displayed the innovative features of the new, better, sleeker, cheaper iPhone, which is being aggressively marketed with the tagline ''Twice as fast, half the price.''
So what's new about the new iPhone? For one, it is much cheaper. The new standard iPhone 3G with 8GB of storage will cost only $199, a dramatic decrease from the $399 of the earlier basic model, which incidentally, Jobs confirmed had been already sold out. Even the $399 price tag had been considered quite a steal from the initial $599 charged.
A higher capacity model with 16GB of memory will be priced $100 more. With these price cuts, Jobs acknowledged that the high price had been somewhat of a dampener to the iPhone's amazing popularity. However, proving that all good things come at a price, the new phone comes with an increased two year commitment to use preferred carrier AT&T services.
Unlimited data plans start at $30; voice plans start at $40 for 450 weekday minutes, setting the minimum monthly cost of owning a fully functional iPhone 3G at $70. Previously, the combined iPhone voice/data plans started at $60.
The iPhone price slash is part of a new deal between Apple and AT&T, the iPhone's exclusive carrier in the United States. AT&T has agreed to subsidise the cost of the phone. Under the agreement, though, AT&T will no longer give Apple a share of its revenue from data-usage plans.
The phone company said it expects the gadget's reduced price to fuel sales that require a two-year service contract and generate increased revenue from data-usage plans, resulting in increased earnings per share by 2010.
As for external appearance, Jobs described the new phone as being ''thinner at the edges'', but that's it. For all purposes, you won't be able to discern the new iPhone from its predecessor by sight.
However, what sets iPhone 2.0 worlds apart from iPhone 1.0 is what's inside the device, and you will realize this only when you get your hands on one, which won't be far away considering the 11 July release date.
The new iPhone is 3G compatible, or usable on faster third-generation networks. Jobs claimed the 3G iPhone will work the Web at speeds close to Wi-Fi, which is also supported, and much faster than the EDGE network the iPhone's relied on to date.
He launched an image and graphics-heavy Web site on the 3G iPhone in 21 seconds that took 59 seconds to launch via EDGE and 17 seconds via Wi-Fi. Sending an e-mail took 5 seconds on 3G, 18 on EDGE and 3 seconds via Wi-Fi. "It's amazingly zippy," Jobs said.
He said that the upgraded device would have a battery that is maximized for the 3G networks, and would provide an industry-leading talk time of five hours. He also said the 3G phone would get five to six hours of Web browsing, seven hours of video and 24 hours for audio usage.
However, this doesn't complete the list of additions. Unlike the earlier model, the iPhone 3G now includes a built-in GPS or Global Positioning System. "Location services are a very big deal," Jobs said.
Multilingual support in iPhone 2.0 is extensive - the touchscreen even lets users draw Chinese or Japanese characters with your finger and have them recognized. "That's a great advantage of not being stuck with plastic keys," Jobs quipped.
He also revealed aggressive expansion plans where the iPhone will be sold in 70 countries before the year ends. With the price cut and Apple's dramatic global market expansion, the company should have little problem meeting its goal of selling 10 million iPhones, analysts opined.
The conference kicked off with a glimpse of the emerging iPhone ecosystem of applications being created by independent developers. About 250,000 software writers have downloaded the tools Apple offered in March that will allow them to create new features for the device.
A range of new applications, from sophisticated games to social mapping services and almost-real-time updates of major league baseball games, have been created for the iPhone.
The applications will be available on Apple's soon-to-launch App Store, which is expected to be ready on or around 11 July and will resemble Apple's iTunes online music and video store. The store will be included on every new iPhone and on older iPhone models once users download the soon-to-be-released iPhone 2.0 software update, which will also include the ability to sync the device with Microsoft Exchange.
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