Apple unveils iPhone 3GS


In the secrecy that often surrounds Apple Inc.’s every move, industry cryptologists had plenty to study in Monday’s otherwise widely hailed unveiling of the company’s newest iPhone, the 3G S.

The focus was on AT&T; Inc., the only U.S. provider of the iPhone. That’s because Apple left its partner in an uncomfortable position.

Some of the new features that iPhone users have clamored for, including the ability to use photos and video in text messages and to tether the phone’s Internet connection to a laptop, won’t be immediately available on AT&T;’s network.


But they will be available in many countries around the world.

“Poor AT&T.; They got totally flayed today,” said Rana Sobhany, vice president of marketing for Medialets, a New York firm that sells ads on cellphones. “Apple was positioning them as the villain.”

She said Apple’s move might be aimed at pressuring AT&T; to end its exclusive agreement now or face the possibility that Apple won’t extend its ties to the carrier beyond the contract’s expiration in 2010.

Apple showed off the iPhone 3G S -- the S stands for speed, to signify how much faster the new phone is -- at its Worldwide Developers Conference in San Francisco, a gathering for the people who write software for Apple computers and phones. More than 5,200 developers from 54 countries attended, Apple said. And though the developers largely cheered each new feature announced for the iPhone 3G S, they jeered every mention of AT&T.;

“You know you’ve got a problem when you’re at an Apple developers’ conference and you get booed more than Microsoft,” said analyst Michael Gartenberg, a vice president at research firm Interpret.

AT&T; said it would offer the new features eventually. Sending photos and videos in text messages, known as MMS, will be available by the end of summer. The carrier did not say when “tethering,” the practice of using an iPhone’s Internet connection on an accompanying laptop, would be available.


AT&T; would probably charge for tethering but not for MMS, a company spokesman said.

In addition, some existing iPhone users were rankled to learn that they would have to pay steep prices to upgrade to the iPhone 3G S. New AT&T; subscribers will pay $199 for a 16-gigabyte version or $299 for a 32-gigabyte version, but existing customers will have to pay $399 and $499, respectively, for the new phones.

“I’m disappointed that I can’t get a free upgrade to the 3G S,” said Mihir Sridhar, a computer science student at the National University of Singapore, who bought his iPhone in December.

The new phone won’t be available until June 19, but Sridhar went to an AT&T; store immediately after it was announced and got the bad news.

AT&T; spokesman Mark Siegel said the company subsidizes the cost of the device for new customers who commit to extended contracts, which allows the company to recoup the subsidies, but it can’t afford to do that with existing customers in mid-contract.

The price for the currently available iPhone 3Gs dropped to $99, which analysts said would shake up the market for smart phones.

AT&T; shares fell 16 cents to $24.40; Apple’s shares slipped 82 cents to $143.85.

Apple has sold more than 40 million iPhones and non-phone iPod Touch devices, said Scott Forstall, the company’s senior vice president for iPhone software. Through its iTunes online store, Apple offers more than 50,000 applications, which have been downloaded more than 1 billion times.

The iPhone 3G S can record videos, can display an internal compass, has a longer battery life and offers voice control that lets users tell the phone to make a call or play a certain song. It also runs an upgraded operating system with 100 new features, including the long-desired ability to copy and paste text and to search the contents of the phone.

Some application developers who had had an early look at the phone showed off several of its new capabilities.

Dr. Cameron Powell of Airstrip Technologies demonstrated one program awaiting approval from the Food and Drug Administration that would let doctors remotely monitor patients’ health -- using such indicators as blood pressure, pulse and oxygen.

The developer network is one of the key weapons in Apple’s arsenal to stave off rivals, including BlackBerry maker Research in Motion Ltd., cellphone giant Nokia and Palm Inc., which last week unveiled the Pre smart phone to largely favorable reviews.

The Cupertino, Calif., company’s chief executive, Steve Jobs, who typically shows off fancy new hardware, did not attend Monday’s session; he is on medical leave after a bout with pancreatic cancer. He is due to return at the end of this month.