Apple Unveils New Iphone 3g With Gps and a Lower Price

The next generation iPhone will include faster internet access, satellite navigation ? and a drastic drop in price.

Speaking on stage at Apple's Worldwide Developers Conference Steve Jobs, the chief executive of iPod maker Apple, unveiled the new iPhone 3G ? a cheaper, more powerful replacement for the handset launched a year ago.

Internet speculation had been rife about the new features that might be included on the high-end touchscreen handset, but in the end some of the rumors ? such as built-in video calling - proved wide of the mark.

As reported in the Guardian, the new model will include GPS satellite navigation as well as faster 3G internet connection and a suite of software improvements.

But the biggest news was the sharp drop in the headline price of the phone itself. The iPhone 3G will cost just $199 (?100) ? half the current $399 retail price in US shops.

The iPhone currently costs ?269 in the UK, and although an Apple spokeswoman said British prices would be announced at a later date, it is understood that the phone is likely to be available for a variety of different prices depending on which tariff customers sign up to.

"We did figure out what our next challenges are ? the next mountain we have to climb," said Jobs at the end of a two-hour event in San Francisco. "The number one reason people didn't buy the iPhone was that they couldn't afford it, so we need to make the iPhone more affordable."

The news was welcomed by industry observers, who are keen for the gadget to fulfil the hype generated over the past 18 months. But the changes reveal some of the difficulties that Apple ? which has been flying high for the best part of a decade on the success of its iPod music player ? has found with moving into the phone industry.

"If Apple knows about nothing else, it knows how to generate and exploit hype. But to make a better version available for European consumers makes sense," said John Delaney, an analyst with IDC. "Having only achieved six million sales ? and most of them in the US ? I think they feel a need to light a fire underneath it."