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Apple Updates iPhone, Slashes Price

Steve Jobs, Apple’s CEO, confirms rumors that a cheaper iPhone with GPS will be available in July.

As at any Apple event, attendees of the World Wide Developers Conference in San Francisco showed up on Monday expecting to be awed by a Steve Jobs Show. And judging from the elevated mood in the room immediately after the Apple CEO’s presentation, they were. The biggest technical news, which was widely predicted, is that the new iPhone, available July 11, will operate over so-called 3G networks, which are many times faster than the EDGE networks that the iPhone currently uses. Also confirmed was the rumor of GPS for real-time location tracking on the iPhone. But perhaps the most crowd-pleasing announcement is the dramatic price cut: from $399 for an eight-gigabyte model to $199. A 16-gigabyte model will be $299 and available in black and white.

When the iPhone was introduced last June, some analysts predicted that consumers would reject it because of its hefty price tag and its reliance on AT&T’s relatively slow network. Since the phone’s release, roughly six million iPhones have been sold to people who have looked past sluggish downloads and fallen in love with the gadget’s intuitive touch interface and impressive graphics. But the difference between the EDGE and 3G networks can be startling. During Jobs’s presentation, he contrasted the two versions of the phone. It takes 59 seconds for the current phone to load a Web page with heavy graphics. On the new 3G phone, the same page loads in 21 seconds. By comparison, it takes 17 seconds on a Wi-Fi network. E-mail applications download 3.6 percent faster.

By adding GPS, Apple has taken an important step toward expanding location-based services–tools that people use to find friends and activities around them in real time. Today’s iPhone has the ability to locate itself, within a relatively large radius, using signals from cell-phone towers and Wi-Fi stations. GPS takes it a step farther, pinpointing location down to a couple of meters. This enables real-time tracking, making the iPhone a useful in-car navigation tool.

Jobs also provided an update of the third-party software, available in the forthcoming iPhone application store, and updates on the phone’s compatibility with enterprise software. As announced in March, the iPhone will support Microsoft Exchange, providing compatibility with Outlook’s mail, contacts, and calendar. The iPhone will also support Apple’s iWork collection of productivity software, as well as Microsoft Office. And importantly, it will include the security features that have convinced enterprise customers–including the U.S. military and a number of Fortune 500 companies, law firms, and pharmaceutical companies–that the iPhone is as secure as any mobile device.

Since March, when the iPhone software developer kit was launched, a number of third-party companies and individual programmers have been racing to develop applications that run on the phone. At the conference, Apple highlighted a handful. Game developers are excited about the potential for using the built-in accelerometers as game controllers, and Sega showed off its Super Monkey Ball game. Loopt, a location-based startup that has previously only run on Sprint and Boost Mobile phones, demonstrated how a person using its service could find nearby friends. Typepad, a popular blogging tool, will offer software that enables easy mobile blogging on the iPhone.

In addition to the iPhone upgrades and previews of third-party software, Apple announced that it has revamped its .Mac service, a $99 a year service that provides e-mail, a Web page, and syncing options. It has been rebranded into MobileMe and will enable mail, calendar updates, and address-book changes to stay constantly synchronized over all Macs, PCs, and iPhones. This move illustrates that Apple is finally ready to recognize the importance of cloud computing, famously the province of Google and other Internet companies. However, since it’s a pay service, it’s unclear how much traction Apple will see as it competes with popular free services such as Gmail and Yahoo’s Flickr.

As with all Steve Jobs keynotes, bullet points were big, and technical details were scarce. However, in the coming weeks, and after the iPhone’s release on July 11, more information is expected to emerge. Some experts were predicting an upgrade to the phone’s camera, but on Monday, there was no mention of a camera update or added video capabilities.

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