SAN FRANCISCO — The iPhone will soon be $200 cheaper and come with satellite navigation and faster Internet access, but it will be pricier to own because monthly service charges are rising.
Apple revealed Monday 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 cellphone 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 Cupertino, Calif.-based company said Monday. A 16-gigabyte model is to sell for $299.
Current iPhone owners who buy a new model and sign up for a new AT&T contract won’t have to pay penalties to get out of their current contract, AT&T spokesman Michael Coe said. And anyone who bought an iPhone in an AT&T store after May 26 can return it before Aug. 1 for full credit against a new one — less a 10 percent restocking fee.
Apple plans to make up the difference in revenue with sales volume and subsidies that wireless carriers will pay for the right to carry the gadget.
In changing the pricing arrangements, Apple is pulling out of some of its revenue-sharing arrangements with wireless carriers, a move that frees carriers to charge more for the service.
The new iPhones are designed to work over so-called 3G, or third-generation, wireless networks and have global-positioning technology built in.
Analysts have said Apple needed to slash the iPhone’s price and upgrade it to the faster networks to hit the company’s target of selling 10 million iPhones by the end of this year.
The iPhone is in increasingly direct competition with the BlackBerry and Treo smart phones, and the new iPhones’ support of Microsoft’s Exchange software will help Apple steal market share within corporations.
Apple chief executive Steve Jobs showed off the new models of the iPhone and about a dozen new applications for the device at Apple’s Worldwide Developers Conference.
AT&T, the exclusive U.S. carrier for the phone, said service for the phone will start at $39.99 per month, plus $30 for unlimited data. That works out to a $10 increase from the cheapest plan for the first-generation iPhone.
