Justin Sullivan
Even Apple Inc. isn't immune to a spending slump.
The consumer electronics powerhouse, which has always been able to charge a premium for what it sells, slashed prices on many of its high-end laptop computers and its flagship operating system software while announcing that consumers will soon be able to get a $99 iPhone - all in an effort to bolster sales amid sagging confidence and an expected drop in electronics sales this year.
Apple also unveiled an upgraded version of the touch-screen phone that the company says is faster than its predecessors and allows users to record video with a built-in three-megapixel camera.
For Apple's competitors, including BlackBerry maker Research In Motion Ltd. , the new iPhone 3GS is the latest sign that the battle for control of the market for smart phones is ramping up, as device makers and telecom carriers try to cash in on the switch from traditional cellphones to Web-enabled devices.
Apple's announcement comes just two days after Palm Inc.'s highly touted Pre device went on sale in the U.S., - it will go on sale in Canada later this year - and just a week after Google Inc. launched a pair of phones in Canada that support its Android operating system.
Analysts say RIM is also preparing to launch a pair of new devices as early as this summer.
By offering an iPhone for $99, Apple has opened itself up to a new group of consumers who might not have been able to afford an iPhone before, potentially boosting its overall share of the smart phone industry, said RBC Dominion Securities analyst Mike Abramsky.
"Everybody wants a $99 iPhone," he said. "It addresses a whole new segment of users globally for which $99 is a very compelling price point."
Rogers Wireless Communications Inc. will remain the sole carrier of iPhones in Canada, while AT&T Inc. will enjoy similar exclusivity in the United States.
Canaccord Adams financial analyst Peter Misek expects competing carriers, such as Verizon Communications Inc. in the U.S., to slash prices on iPhone competitors such as RIM's BlackBerry devices in the coming weeks to minimize the Apple onslaught.
"The price cut will likely be matched by Verizon for all the BlackBerrys within the next two to three weeks," he said. "If they do that, and I think they will, RIM will fare just fine."
Apple also announced a slate of new features for its iPhone software, including "cut, copy and paste" text editing and the ability to rent and purchase movies directly from iTunes. As well, developers will now be able to create applications that enable users to make purchases within their application, such as renewing magazine subscriptions or buying additional software for a video game. Apple will take 30 per cent of the revenue from those transactions, the same amount the company takes from the purchase of applications themselves.
Apple's vice-president of marketing, Phillip Schiller, announced the series of price cuts to computers, in addition to a bevy of upgrades to the company's Macbook computer line, during the keynote address at a developers' conference in San Francisco. The new Macbooks include lithium polymer batteries that Mr. Schiller said will survive 1,000 recharges, last more than five years and provide up to seven hours of power on a single charge. As for the price cuts, a 15-inch Macbook Pro, for example, was $2,149 and an upgraded version now costs $1,999.
As well, Mr. Schiller announced upgrades to Apple's OS X operating system, including faster installation times, an upgraded version of Apple's Quicktime media player and its Safari Internet browser. The new version of OS, dubbed Snow Leopard, will be available as an upgrade to current users for $29 (U.S.) in September, about one month before Microsoft Corp. begins selling Windows 7.