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SAN FRANCISCO - The iPhone will soon be $200 cheaper and include satellite navigation and faster Internet access, but it will be pricier to own because monthly service charges are rising.
Apple Inc. revealed yesterday that it has scrapped its premium pricing plan for the iPhone and unveiled an upgraded model that works over faster wireless networks, addressing key criticisms about the device that have hurt the company's foray into the cell-phone industry.
The iPhone's lowest price - for an 8-gigabyte version with the major new features - will fall to $199 when new models go on sale July 11, the company said. A 16-gigabyte model is to sell for $299.
The company plans to make up the lost revenue with sales volume and with subsidies that wireless carriers will now pay for the right to carry the gadget.
The phone now costs $399 or $499 depending on the amount of memory.
In changing the pricing arrangements, Apple is pulling out of some of its revenue-sharing arrangements with wireless carriers, a move that frees the carriers to charge higher prices for the service.
Steve Jobs, Apple's chief executive officer, showed off the new models of the iPhone and about a dozen new applications for the device at Apple's Worldwide Developers Conference in San Francisco.
Those applications range from video games that use the iPhone's motion-sensing technology to guide characters, tools for medical students to study anatomy, and a program that allows iPhone users to look on a map and see which of their cell-phone-carrying friends are nearby.
Mr. Jobs said the company has sold 6 million iPhones since the first model was launched nearly a year ago and 700,000 since March.
AT&T Inc., the exclusive U.S. carrier for the phone, said service for the phone will start at $39.99 a month, plus $30 for unlimited data.
That works out to a $10 increase from the cheapest plan for the first-generation iPhone.
Apple said in a regulatory filing that under most of its new carrier agreements, it will not receive a share of subscribers' monthly service fees as it has under contracts for the first-generation iPhone.
The 1.73 million iPhones Apple sold in the first three months this year gave it a 5.3 percent share of the worldwide smart-phone market, according to research firm Gartner Inc.
Apple has been adding overseas markets gradually with carrier deals.37.77713 -122.4196