Apple's Jobs Unveils Thinner, More Capable IPhone

Apple Inc. Chief Executive Officer Steve Jobs introduced a thinner iPhone today with a sharper screen and video-chat features, an attempt to ward off competition from devices running Google Inc.’s Android software.

The iPhone 4 will go on sale in the U.S. and four other countries on June 24, Jobs said at the company’s Worldwide Developers Conference in San Francisco. A 16-gigabyte model will cost $199 and a 32-gigabyte version will sell for $299.

The iPhone has emerged as Apple’s top product, raking in 40 percent of revenue last quarter -- more than the Macintosh computer or iPod. The latest device has a new camera system, capable of videoconferencing and recording high-definition video. The iPhone 4 comes to market as HTC Corp. and Motorola Inc. ready rival products based on Android, the mobile-operating system software created by Google.

“The biggest deal is the video calling,” said Michael Yoshikami, chief investment strategist at YCMNET Advisors in Walnut Creek, California. He owns Apple shares. “That will drive traffic to the phone.”

Jobs, 55, counts on iPhone updates to entice new customers and persuade current owners to trade up to the latest model. Cupertino, California-based Apple has upgraded the iPhone each summer since the smartphone’s debut in June 2007.

Photographer: David Paul Morris/Bloomberg

The iPhone is now one of Apple's most important products, raking in more sales than the Macintosh computer last quarter. Close

The iPhone is now one of Apple's most important products, raking in more sales than the... Read More

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Photographer: David Paul Morris/Bloomberg

The iPhone is now one of Apple's most important products, raking in more sales than the Macintosh computer last quarter.

It released the iPhone 3G in July 2008, which added support for third-generation wireless networks. A faster version, called the iPhone 3GS, went on sale in June 2009. Apple has sold more than 50 million iPhones in the past three years.

Android Challenge

Android-based smartphones threaten to top the iPhone in 2013 in market share, according to IDC. Shipments of Android devices may reach 68 million that year, making it the second most popular operating system after Nokia Oyj-owned Symbian, according to Framingham, Massachusetts-based IDC.

AT&T Inc. remains the exclusive U.S. carrier for the iPhone and buyers will need to sign a two-year service contract, Jobs said.

The iPhone 4 has a so-called retina display that has four times as many pixels as previous models, Jobs said. It is 24 percent thinner than the 3GS and has improved battery life with seven hours of 3G talk. The phone will come in black and white.

‘Star Trek’

“It’s the biggest leap we’ve taken since the original iPhone,” Jobs said. After growing up with TV shows like “The Jetsons” and “Star Trek,” he said he has been “dreaming about video calling, and it’s real now.”

The video-calling app, named FaceTime, will only work on Wi-Fi this year, rather than phone carriers’ networks, he said.

The company also updated its iMovie program, which lets users record, edit and share video on the handset.

“The iPhone is taking share from non-phone devices” because it has features that users could previously only access on their computers, said Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis, who is attending the conference. “It will have enough razzle-dazzle,” said Munster, who rates Apple shares “overweight” and doesn’t own any.

Jobs, in his trademark jeans and black turtleneck, was briefly unable to demonstrate some of the features because he couldn’t get a wireless connection. He asked attendees to shut off the wireless connections on their computers and mobile hot spots because of interference, saying, “I’d like you to look around and police each other.”

‘Guitar Hero’

There are now more than 225,000 tools, games and other applications available for downloading, Jobs said. That compares with about 50,000 for Android, according to Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co. in New York. More than 5 billion programs have been downloaded from Apple’s App Store, Jobs said.

Activision Blizzard Inc. released an iPhone application for its “Guitar Hero” game today for $2.99, and Netflix Inc., the online movie subscription service, plans to unveil a free program for the iPhone this summer.

As Jobs walked onto the stage to applause, one of the 5,200 conference attendees yelled out, “We love you, Steve!” His response drew applause too: “Thanks, I think.”

Speculation about what the fourth-generation iPhone would include escalated in April after an unreleased prototype, lost by an Apple engineer at a bar in March, was disassembled and photographed by technology blog Gizmodo.com.

“Believe me, you ain’t seen this,” Jobs said today.

The iPhone 4 will first be released in the U.S., Japan, France, Germany and the U.K. By the end of September, it will be available in 88 countries.

Cheaper Model

Apple will sell a new, 8-gigabyte 3GS model for $99 this month, making it the company’s lowest-priced model. It previously sold for $199.

Apple fell $5.03, or 2 percent, to $250.94 today in Nasdaq Stock Market trading. The stock has gained 19 percent this year. Today’s drop mirrored a 1.9 percent decline in the Standard & Poor’s 500 information-technology index.

Apple’s new device will be powered by an updated version of the iPhone operating system. Called iOS 4, it adds more than 100 features, including multitasking -- the ability to run more than one third-party program at the same time.

Developers will get a near-final release of the software today, Jobs said. It will be available “soon” for users, he said.

It also supports an advertising platform called iAd, designed to give developers a new way to make money from their apps. Apple has received commitments of more than $60 million in iAds for the second half from companies such as Nissan Motor Co., General Electric Co. and Target Corp., Jobs said.

“The question now is what’s next,” said Michael Obuchowski, managing director at First Empire Asset Management Inc. in Hauppauge, New York, which oversees $3.8 billion in assets including Apple shares. “Just improving it every year enables competitors to catch up to it very quickly.”

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

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