Apple Unveils New iPhone, But Its Stock Falls

The chief executive officer of Apple Inc., Steve Jobs, delivered the first major makeover of the iPhone, unveiling a faster, cheaper handset that may help him convince business users to switch over from the BlackBerry.Apple sank 2.2% in Nasdaq trading after saying carriers won’t have to give the company a cut of the lucrative monthly service fees from the new third-generation phones.Mr. Jobs is seeking to make the iPhone more mainstream, lowering the price on one model to $199 from $399 and adding programs for the business users who have made Research In Motion Ltd.’s BlackBerry the top-selling Web-surfing handset in America.“The main restriction was price, and they’ve taken that away,” an analyst at municipal bond trading and underwriting firm Grigsby & Associates in New York, Hakim Kriout, said. “At that level, Apple can sell more iPhones, which will compensate for the loss of revenue sharing.”Apple, based in Cupertino, Calif., fell $4.03 to $181.61 on the Nasdaq Stock Market. Before yesterday, the shares had surged 56% after dropping to a low this year of $119.15 in February on concern an economic slowdown in America would depress sales of iPhones and iPod media players.The new, thinner phone will go on sale in 22 countries on July 11 and run on third-generation, or 3G, wireless networks that deliver Internet content at least two times faster than the prior model, Mr. Jobs, 53, said yesterday at Apple’s developer conference in San Francisco.AT&T Inc. will subsidize the cost of the handset in America, where it’s the exclusive iPhone carrier. Apple declined to say how much carriers are paying it for each phone, except that it’s more than the selling price, according to the chief operating officer, Timothy Cook.Customers will be required to activate the iPhone at AT&T or Apple stores to discourage the practice of “unlocking” the device for use on other networks, the CEO of AT&T’s wireless unit, Ralph de la Vega, said.In a regulatory filing, Apple said it won’t get payments from carriers for the new phone beyond the original purchase price. The company will still get a cut of revenue from older models running on authorized networks.“Wireless service providers are offering subsidies, so it sounds like Apple is giving up a share of the revenue in exchange for that,” an analyst with Dinosaur Securities Inc., David Garrity, said in an interview from New York.The iPhone went on sale last June, and Apple sold 6 million before running out in May, Mr. Jobs said. The company moved 700,000 in the current quarter, which ends this month. Yesterday, Mr. Cook reiterated the company’s goal of shipping 10 million this year, more than double the number in 2007.Apple sold its inventory of the older models sooner than it planned, Mr. Cook said in an interview. The company decided to cut the price after finding that 56% of the people it surveyed said the phone was too expensive, he said.“It wasn’t that the phone didn’t appeal,” Mr. Cook said. “All of these people wanted it, but paying $399 was too much.”

Apple Unveils New iPhone, But Its Stock Falls

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