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New iPhone 3G S debuts for US$199

APPLE Inc slashed the entry price for an iPhone in half and lowered some laptops by US$300 on Monday, the company's first dramatic price cuts since the recession began a year and a half ago.

With co-founder and CEO Steve Jobs absent until his medical leave is over at the end of June, Apple's biggest unveiling at its annual conference for software developers was a new model of the iPhone, the 3G S. It looks the same but sports a faster processor, longer battery life, an internal compass, a video camera and a camera with better resolution and an auto-focus function.

A 16-gigabyte version of the 3G S will cost US$199 and a 32GB version will be US$299.

The 8GB iPhone 3G, which came out last year, now costs US$99, instead of US$199. When the iPhone debuted two years ago, Apple fans had to shell out US$499 for a 4GB version and US$599 for an 8GB one.

Apple is known for ending events with a last-minute surprise, leading to some anticipation that Jobs might make a cameo in Monday's two-hour presentation. But he did not take the stage, and Apple's top marketing executive, Philip Schiller, exited without uttering the company's signature line that there would be "one more thing."

Tougher competition

The latest iPhones go on sale on June 19, just as two-year contracts for the buyers of the original models are expiring and Apple faces tougher competition from the likes of Research in Motion Ltd and Palm Inc. On Saturday Palm came out with a well-regarded iPhone rival, the US$200 Pre.

Analyst Michael Gartenberg, with the Interpret market-research firm, said the new iPhone pricing breaks through an important barrier for consumers. It will likely cause other smart phone makers to offer something similar, he said.

"Every US$100 you move down in consumer electronics brings in a lot more customers," he said. "Ninety-nine dollars is a psychological price point, so that's a real barrier to move through. It becomes something people can afford - it becomes an affordable luxury."

Schiller said that the US$99 iPhone will reach people just joining the smart phone market.

But lowering the price could be risky for Apple unless its new phones have enough appealing features.



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