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  (Source: Apple)

iPhone 3G  (Source: Apple)

iTunes App Store  (Source: Apple)

iPhone 3G 16GB in white  (Source: Apple)
Apple swings for the fences, again.

When it comes to announcing a new product, Apple knows how to set the stage and get people excited right up until the official announcement. Nowhere was this more obvious than with the launch of the original iPhone. The fervor surrounding the mobile handset didn't settle down when the first generation iPhone was announced in early January 2007 -- it continued until the eventual release of the phone in June of that year.

Speculation on the follow-up, the "3G iPhone", has been building ever since the first generation model was revealed -- but things really started getting a bit uproarious over the past few months. Case makers began leaking dimensions for the upcoming phone, supposed "leaked" pictures of the phone were drooled over by nearly ever gadget site on the web, and leaked firmware was picked over with a fine-tooth comb.

Apple today finally announced its next generation crowd pleaser. Apple is looking to address the shortcoming of its first effort this time around and further expand its popularity (Jobs previously stated that he wants 10 million iPhones sold within the first 18 months – it already surpassed the 6 million mark during its first year).

First things firsts – the worse kept secret about the second generation iPhone is its 3G capabilities. The first gen model was widely criticized for its slow EDGE cellular broadband capabilities. Apple is now matching the competition with the iPhone 3G. The iPhone 3G has tapered look with thinner edges, solid metal buttons, a black plastic backing, flush headphone jack [thank goodness], and vastly improved audio.

The faster cellular connectivity of the iPhone 3G allow for download speeds nearly as quick as WiFi and speeds that are 2.5 times as fast as EDGE. The iPhone 3G also sports better battery life than its predecessor. The iPhone 3G now supports 2G talk time of 10 hours, 3G talk time of 5 hours, 7 hours of video, 24 hours of audio, and 5-6 hours of high-speed web browsing.

Another big addition is fully integrated GPS tracking. IPhone 3G users can now get positioning information from WiFi, cell towers, and now the hardware GPS.

Apple also confirmed early speculation that price breaks would be in store for the new lineup of iPhones. The Cupertino, California-based company confirmed today that the new 8GB iPhone will be priced at $199 with a new two-year contract when it launches July 11, while the 16GB iPhone (which will be available in white at a later date) will set you back $299 under the same terms.

The iPhone 3G will be rolled out in 22 countries on July 11 (Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK and the U.S.).

Apple first announced the Software Developer Kit (SDK) for the iPhone in early March along with the 2.0 firmware update. The SDK allows third-party manufacturers to create their own applications for the iPhone and iPod touch and upload them to the new iTunes App Store.

Developers are charged a $99 fee to publish each application to the iTunes App Store -- Apple also takes a 30% cut of the purchase price for each application sold to customers to cover hosting and processing fees. For generous developers that provide their apps for free on the iTunes App Store, the aforementioned hosting and processing fees are dropped.

Jobs noted that applications that are less than 10MB in size will be downloadable through the cell network – applications larger than 10MB will have to be downloaded through a WiFi connection of through the desktop iTunes application. Automatic updates for applications will also be pushed through to the device.

A number of applications were on display that were developed using the SDK including SEGA’s Super Monkey Ball (which will be available for $9.99 from the iTunes App Store), an integrated eBay tool complete with bidding and search, and a news reader provided for free by the Associated Press. The latter tool will send local news to you based on your location, save images, video, and text for offline viewing, and even allow you submit news as it happens.

The 2.0 software -- which is available not only for the iPhone 3G, but also to the original iPhone and iPod touch -- adds a number of new features to make the devices more corporate friendly. These include push email/calendar/contacts between an iPhone/Mac/PC via MobileMe, auto-discovery, global address lookup, Cisco IPsec VPN, Certificates and Identities, WPA2/802.11x, and remote wipe.

Other features include contacts search, bulk delete/move for emails, a new scientific calculator, and the ability to save images to the Photo Library. Microsoft PowerPoint documents are now supported as well.

IPhone users will receive the 2.0 software update for free, while iPod touch users will have to pay $9.99. The update will be available next month.

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By Pirks on 6/9/2008 3:34:59 PM , Rating: 2
It's kind of illogical, isn't it? They want to get to mass market with iPhone, but they stay away from mass market in computers. Why? Does anyone have an industry insider's view on that? Is it just because of Jobs contradicting sound economical policy due to his inner fears or are there REALLY serious economic reasons not to do that? I mean going for mass Mac market iPhone 3G style.

By vexingv on 6/9/2008 4:01:19 PM , Rating: 2
b/c the smartphone is still a relatively new market for the average consumers. apple needs to hook people now. this way they'll be iphone users for life and they'll be in a locked environment/platform. they might also see a rise in Mac hardware sales through a halo effect (think ipods). also, apple gets revenue sharing from the wireless carries and now its app store (but the app store may actually be a lost-leader model to push their hardware sales much like how the itunes store operates).

i have to say i bought a 3rd gen ipod and later bought a powerbook (but i had used Macs before at medical research labs). with the ipod i got to put my own mp3's and on OSX you can load whatever you want. but with the iphone and its app store, i'm a bit skeptical about it; i'd much prefer an open platform such as the one Google's Android is trying to accomplish. however, with no hardware available it's going to be a tough sell especially when you can get an iphone in a month for $200.

apple has essentially rattled the smartphone market. new smartphones are going to have to be priced much lower to compete. even then, at a lower price, the iphone's feature set is hard to beat.

By Pirks on 6/9/2008 4:51:59 PM , Rating: 2
apple needs to hook people now. this way they'll be iphone users for life and they'll be in a locked environment/platform
So why don't they hook people to Macs as well, by introducing additional cheap mass market oriented Mac models? My question is: why Apple decides to hook people on iPhone but refuses to do the same with Macs by extending their model line with cheap budget-oriented Macs?

By othercents on 6/9/2008 6:13:23 PM , Rating: 2
Simple... Apple won't be able to keep up with demand.

By michael2k on 6/9/2008 6:13:48 PM , Rating: 2
They ARE hooking people to Macs with cheap mass market Mac models. The iPhone!

The reason they don't make cheap "PCs" is because people only upgrade their PCs every several years while they upgrade their phones every couple years. Profit man, profit is the reason why they don't extend their Mac model lineup with a budget oriented Mac.

Unless you count the Mac mini as "budget oriented".

By kelmon on 6/10/2008 9:01:22 AM , Rating: 2
The real reason is that there's no money to be made in that sector of the market. Apple could take the risk that a budget model will attract non-Mac users in the hope that they'll buy a "high-end" Mac later but it's probably not worth it. Chances are that people who buy a budget machine now will continue to buy budget computers and, as noted at the start of this reply, there's no money to be made there.

Remember: market share is not important. What is important is profit and a high market share does not necessarily guarantee a maximum profit. Apple's a relatively small company and they're going to continue to focus on those high-margin markets so that they can maximise profits.

By fic2 on 6/10/2008 12:16:32 AM , Rating: 2
What I wonder about having to buy the apps from the Apple store is - if I get an iPhone now and a newer one in 2 years will I have to rebuy all the apps I use?

I would consider an iPhone if I had my choice of cell providers and if it was an open platform (not having to buy through the apple store - 30% for "hosting fees", please).

By psychobriggsy on 6/10/2008 7:59:45 AM , Rating: 2
If the applications are using Fairplay as the keynote suggested, I imagine that you can put an app on several devices, and also de-authorise your old iPhones and iPod Touches as and when they get replaced.

30% is a fair price for such a service with such a reach, especially as it covers all credit card processing fees, servers, hosting, free updates, bandwidth, etc. It also hosts free apps (no fee required), you can also ad-hoc supply applications outside the app store for 100 users, and there's also enterprise app distribution outside the app store.

By michael2k on 6/9/2008 4:09:49 PM , Rating: 2
No, it's not illogical at all.

Tell us how Apple can achieve mass market in computers and not go out of business? Look at Dell and tell me that Apple should "race to the bottom"? What "sound economical policy" are you quoting here?

The business model (and it is quite sound) that Apple is pursuing is the BMW business model: Premium, luxury, products at a reasonable price. They aren't out to beat Dell, HP, or Acer (which represents the equivalent of Toyota, Ford, or GM), they are out to beat Gateway, Toshiba, Lenovo, Fujitsu, and IBM (which represents the, essentially, niche car manufacturers of both low and high value such as Aston Martin, SMART, Lotus, Chery, and Rolls Royce)

By Pirks on 6/9/2008 4:39:41 PM , Rating: 2
Let's suppose that Apple extends the model line of Macs and introduces cheaper mass-market oriented Macs. How is this going to hurt them if the Mac sales will shoot through the roof because of lowered prices, just like with iPhone 3G?

What I'm asking here is not "why Apple can't move from expensive Macs to cheap Macs", my question is this: why Apple can't introduce ADDITIONAL cheap models, while keeping their traditional expensive models intact?

Please tell me how can increased Mac sales hurt Apple, given that all their old models are in place and only been extended with a few budget mass market oriented Mac models?

By michael2k on 6/9/2008 5:14:32 PM , Rating: 2
Oh, that's easy. Every budget Mac that steals the sale of a premium Mac hurts them. The only way Apple can release a budget Mac that doesn't hurt a premium Mac is through differentiation of features and form factor.

And if you take THAT into consideration, the iPod touch and the iPhone 3G are both "budget mass market oriented Mac models". Seriously, what would a "budget Mac user" need that an iPhone can't deliver?

By Pirks on 6/9/2008 6:04:23 PM , Rating: 2
The only way Apple can release a budget Mac that doesn't hurt a premium Mac is through differentiation of features and form factor
Agreed. That's why I was asking this question: why can't Apple add a model of cheap Mac that will look different from the current models (i.e. different features and different form factor just like you said). How about somewhat stripped down AMD Athlon X2-based Mini in a standard miniATX case or something like it. See, Apple has no models like this, they have either tiny microcase (Mini) or a monoblock (iMac) or a monster tower workstation (Pro). Dude, where's my $300 miniATX-like Mac Mini? The one that nicely fills the _HUGE_ gap between Mac Mini and Mac Pro. Why they keep that HUGE hole in their model line in the first place? Any business reasons or is it just Jobs's fears or somethin? Whatcha think?
what would a "budget Mac user" need that an iPhone can't deliver?
Big nice screen, full-size keyboard, decent mouse, fast hardware, way more powerful and capable apps and games, and expandability/upgradeability. Is this enough?

By michael2k on 6/9/2008 6:09:46 PM , Rating: 2
So what you are describing sounds like a $1200 Mac to me. What feature/capability/niche would you be adopting to get the $300 Mac?

Given that the iPhone is $300?

Apple is going to sell a $300 miniATX Mac profitably, said system would have to cost Apple something like $100. Which, bluntly, is an iPhone.

You want big screen? Full sized keyboard? Decent mouse? Fast hardware? Expandability and upgradeability?

Welcome to the Mac Pro.

You have to pay for the features you want, and if the feature you want is "cheap", well, Apple has to have a second revenue stream. Maybe 3 year subscription to MobileMe?

So $300 up front for a "cheap" Mac, and three years of MobileMe for $99 a year.

By kelmon on 6/10/2008 9:33:40 AM , Rating: 2
Absolutely correct. You can add to this that releasing budget Macs would also increase Apple's overall costs and/or reduce the resources available to those aspects of the market that are high-margin (i.e. more profitable). Releasing a budget Mac could be considered a loss leader, but I seriously doubt that it would lead to a net increase in profits, because those who buy a cheap Mac would likely continue to buy cheap Macs in the future, and those who do buy "high-end" Macs amy elect to buy a cheaper version instead.

Apple knows what they are doing.

By Cheesew1z69 on 6/9/2008 5:23:45 PM , Rating: 2
IBM = Lenovo

Acer = Gateway

By Cheesew1z69 on 6/9/2008 5:33:25 PM , Rating: 2
Also, Apple computers, are not reasonably priced IMO.

By michael2k on 6/9/2008 6:21:59 PM , Rating: 2
What is reasonably priced, then? The prices IBM, Gateway and eMachines charged obviously were too low, otherwise they would not have been sold.

By Totally on 6/10/2008 10:20:46 AM , Rating: 2
sorry bud, 1 out of 3 fail.

By glennpratt on 6/9/2008 5:43:29 PM , Rating: 1
Since when is $199 + 2 yr contract with mandatory data 'mass market'.

May I suggest you are a very rich person in the grand scheme of things if you think that's 'mass market'.

By Pirks on 6/9/2008 6:24:08 PM , Rating: 2
Don't you agree that due to drastically lowered iPhone 3G price this market is still much more mass orineted and much less elite/rich oriented compared to first iPhone a year ago?

If you agree - then my question becomes "why Apple can't adopt the same policy for Macs and make them more mass oriented and less elite/rich oriented just like they did it with iPhone 3G?"

By glennpratt on 6/10/2008 12:54:11 PM , Rating: 2
$199 with 2 yr contract + data isn't cheap for a phone. That's a commitment to over $2000.

It is definitely an improvement over $399, but it's nowhere near the bottom of pricing, even for smart phones. Apple computers aren't cheap, but they aren't that expensive either.

They just don't make low end models, likewise they don't make low end phones.

By johnnyMon on 6/9/2008 6:18:43 PM , Rating: 2
Mass-marketing the iPhone drives Mac computer sales. Why make their computers a commodity like PCs and go for a tiny slice of profit? Why not keep what they're doing by closing their OS and making expensive computers, along with getting $100+ each year for upgrades of their OS from their users? They already have a shocking percentage of sales for computers that cost over $1,000.

They would be happy to make zero dollars on each iPhone if it would cause a good percentage of iPhone users to become Mac users as well.

By walk2k on 6/9/2008 6:41:35 PM , Rating: 2
basically the question you are asking is, why don't they make computers that run Windows?

By BruceLeet on 6/9/2008 7:16:15 PM , Rating: 2
If they had a significant market share, hackers would flock like the salmon of capistrano and the security flaws would bloom. Partial reason why their O/S isn't hacked to death, becase who wants to obtain pretty photoshop images?

Dont forget how long it took for an Apple machine to be compromised :p

By androticus on 6/9/2008 9:00:50 PM , Rating: 2
What makes you conclude "they stay away from mass market in computers"?

I switched from PC to Mac for my day-to-day computing and have been very happy (although I continue to use all three platforms for work.)

Their mac sales have been increasing like gangbusters -- much faster than the industry average. It only takes a few years of that kind of growth to start developing a major presence in the market. I'm sure they are simply following a sensible and proven business strategy, rather than trying to unleash an instant clone market which might increase share for Mac OS, but destroy the golden goose in the process by diminishing the quality of the product.

Entry-level Macs are really no more than other quality brands, and frankly not hugely more than junky discount brands. Particularly with Microsoft able to do no right (esp under Ballmer) I think Apple is wise to follow their current Mac strategy.

By jbizzler on 6/10/2008 9:28:29 PM , Rating: 2
Macs are getting cheaper. If you're not gaming, then the price/performance ratio is about the same as a self-built machine. iMac is a little more expensive than an equivelent custom PC, Mac Pro is a little less expensive (it's a workstation, not a home desktop!). But you can't really compare custom machines to Apple machines directly, especially with the iMac.

This WWDC, most of the iPhone stuff was just meh to me. Now MobileMe is interesting, though. It's like Windows Live, only instead it works on Mac OS and Windows!

By novana on 6/15/2008 8:55:51 PM , Rating: 2
That is a really good question but have you ever asked your friends what they have at home?? most of them will tell you pc. In fact there will be at least 60 to 80 % of your friends that uses pc. Now ask what your friends that uses pc about what they think of macs. i bet you 75% of the user will tell u mac "sukx". DO YOU KNOW HOW MUCH MONEY AND TIME IT WILL TAKE TO CHANGE WHAT PEOPLE THINK OF YOUR PRODUCTS?? Thats why they are not stupid and they dont want to compete with pc that are standing on a better ground then macs. Over the course of a years, mac failed to change their reputations against pcs. ipods are a major and smart breack through because there arent many major nor popular brands for mp3s. On top of that pc's market are sliding and you can see a big difference of the people that worked in Microsoft during the tec boom and now. My friend works at Microsoft Seattle, and she told me people that worked in Microsoft during the tec boom are stinking rich compare to people that worked in Microsoft now. To be honest you dont event get paid that much in Microsoft.

"And boy have we patented it!" -- Steve Jobs, Macworld 2007
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