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Fri, Sep 07, 2007 - Page 10 News List

Apple slashes iPhone price by US$200

NEW KID ON THE BLOCK Also on Wednesday Steve Jobs unveiled a new version of the iPod with a touch-sensitive screen, wireless Internet access and a Web browser


Apple Inc slashed the price of the iPhone by US$200 Wednesday -- a rare move for the company that typically discounts only older products. It also updated its iPod media players, introducing a model that incorporates a touch-screen and other iPhone features.

The 8-gigabyte iPhone will be US$399 -- US$200 cheaper than the same model when it went on sale in June. The 4-gigabyte iPhone, which sold for US$399, will be phased out. By comparison, the new touch-screen iPods will start at US$299.

Analysts said the price drop would boost sales, possibly allowing Apple to achieve its self-proclaimed goal of selling 1 million iPhones by the end of this month.

But they also questioned the move, which is not consistent with Apple's standard marketing practice of lowering prices during a product's second or third update. Apple also typically keeps the price the same but adds new features and storage when a product is upgraded.

Apple stock dropped nearly 5 percent after the price drop was announced, trading Wednesday afternoon at US$137.33, down US$6.83.

"It will absolutely help sales -- but at what cost?" asked Tim Beyers, an analyst at The Motley Fool research and investment group. "People who bought the iPhone weeks or months ago must really be annoyed, and with good reason they might think twice about being the first to buy future Apple products. This smacks a little of desperation, and it's very unlike Apple."

Also on Wednesday, CEO Steve Jobs unveiled a new version of the popular iPod media player that has a touch-sensitive screen, wireless Internet access and a Web browser but no cellular phone capability.

The iPod Touch allows users to download songs wirelessly, and, eventually, will let people sample and buy digital tunes from any Starbucks in the US that offers Wi-Fi Internet access.

The iPod Touch can be used for storing photos, music, videos and other digital data. It features the same 3.5-inch, touch-screen display as the iPhone, on which light finger touches allow the user to scroll through menus, and two fingers are used to resize pictures.

The iPod Touch also has built-in wireless Internet access and the Safari Web browser. The iPhone, which runs on AT&T Inc.'s cellular network, also supports Wi-Fi.

An 8-gigabyte iPod Touch will cost US$299. A 16-gigabyte version will cost US$399. It will be shipped worldwide starting later this month.

People using the iTunes Wi-Fi store will be able to download songs for the same price as the regular store, which charges US$0.99 per song.

Starting next month, the Starbucks icon will light up on the iPod Touch whenever a user nears a Starbucks coffee shop that has Wi-Fi access. Users can then download the song that's playing in the shop or get a list of the 10 most recent songs played.

The Starbucks partnership begins at 600 stores in New York and Seattle on Oct. 2. In November, it will be available at 350 stores in the San Francisco Bay Area, and by the end of next year it will be in all Starbucks with Wi-Fi across the US.

Financial terms of the deal were not disclosed.

Jobs also unveiled other new versions of the company's market-leading iPod, including an iPod Nano with a 2.5-inch video monitor for watching movies and playing built-in games. The current version has a 2-inch screen but does not play videos.

"It's incredibly tiny. It's incredibly thin," Jobs said of the new Nano, which features a 320-by-240-pixel screen with 24 hours of audio playback. "We think it's really, really beautiful."

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