New iPhone challenges the BlackBerry

SAN FRANCISCO — SAN FRANCISCO - Taking huge steps to expand its cell phone business, Apple Inc. is introducing a faster version of its industry-changing iPhone, revamping its software to add more features for business users - and substantially slashing prices.

When it hits the stores July 11, the 8-gigabyte version of Apple's new 3G (third-generation cellular) iPhone will start at $199, about a third the price of the original iPhone just a year ago.


Apple promises the new model will download Web sites and Internet data about twice as fast as older versions. The new phone also incorporates GPS satellite navigation to pinpoint a user's location.

Apple also is significantly expanding the number of countries in which it sells iPhones, to about 70.


"At $199, we think [it] will be affordable for everyone," said Apple chief executive Steve Jobs.

When Apple's first iPhone come on the market in June 2007, it was designed for consumers. The newest iPhone includes features specifically designed for business users.

For current users, Jobs also unveiled yesterday the first major software update for iPhone that he said works seamlessly with standard business software such as Microsoft Corp.'s Exchange, Excel and PowerPoint, and Cisco Systems Inc.'s VPN security software.

The new software also makes it easier for third-party developers to make applications for the phone. At Apple's Worldwide Developer Conference here, software designers showed off programs for mobile devices that make it easier for users to bid on online auctions, play video games and access business and medical documents.

But it is Apple's major new push into the business phone market that is likely to shake up the cellular industry the most.

The new iPhone takes direct aim at the current standard e-mail/phone device for business users: the BlackBerry, made by Canada's Research in Motion Ltd.

"We are watching a real competitive war break out between Apple and RIM," said Atlanta telecom analyst Jeff Kagan.

Long considered the computer company for nonbusiness users, Apple worked with about one-third of all Fortune 500 companies to design the new iPhone 2.0 software, Jobs said.


"Everything they told us they wanted, we've built right into the iPhone 2.0 software right out of the box," he said.

Unseating BlackBerry when it comes to business devices won't be easy, not even for Apple.

According to technology research company Gartner Inc., RIM's BlackBerry sold about 42 percent of all "smart phones" in the first quarter of this year, making it the hands-down leader.

Apple's iPhone, introduced just last year, ranked No. 2 with about 20 percent of the market, according to Gartner.

Aware that Apple is moving into its turf, RIM is expected to introduce a new touch-screen BlackBerry it hopes will be an answer to the iPhone.