Analysis on 3G iPhone Announcement

Apple announced on Monday a much faster iPhone that's half the price of the current model.

The news is expected to address one of the biggest complaints about the hugely popular iPhone: That its Internet browsing is too slow. CEO Steve Jobs said the new iPhone, which is based on 3G technology, is 36% faster than top rival Nokia's N95 smartphone.

The things however which were also anticipated and did not get a reference were:
--No tablet device.
--No major changes to the form factor of the iPhone
--No other major product announcements

This reflects from the fact that Apple shares fell 4% after the iPhone announcement, as some investors were left wanting more from the gadget maker. The stock had been up 55% in the past three months on heightened expectations for a radically improved iPhone and the possibility of other product launches.

Apple discussed some other interesting things in the keynote. Here's what we can decipher from the same, with some comments:

The "lower" pricing. As Fortune.com first reported, the new 8-gigabyte iPhone will cost $199 and a 16-gigabyte version will cost $299. However, since AT&T continues to share 24% of monthly revenue from original iPhone so it's revenues are set to get a hit which they announced to offset by raising the price of its unlimited iPhone data plan by $10 a month (as part of its new business model). Also, as part of its new business model, Apple will no longer pocket a share of customer fees.

Background processing of applications on iPhone? One of the critiques of the iPhone is that it doesn't allow third party applications to run in the background, without being visible to the user.

Apple now says that it has solved the background problem by setting up a notification server that can wake up applications on your iPhone and pass incoming messages to them. Since Apple won't run apps in the background, does that mean they'll suddenly launch on screen and start operating on their own? And although notification does some of the things you'd want from the background, it doesn't do them all. For example, some developers want to write background applications that would perform tasks automatically, whether they are pinged by an outside server or not. But still it is a move in the right direction for sure !!!

Apple Development Center. Where is it heading? Apple bragged in the keynote that there were 25,000 applicants to the iPhone developer program, but the company admitted only 4,000. In other words, they seriously pissed off 21,000 developers.

The question is, when (if ever) do the other 21,000 developers get into the program?

Application demo's and what to expect. During the show, Jobs also introduced a slew of new applications for the iPhone, including a wireless system that automatically forwards e-mail to other devices, a friend-finding service called Loopt and mobile blogging software from TypePad.

Other new applications include a service from MLB.com that provides a live scoreboard of major league games, and music-making software, called Cow Terry, for creating songs on the phone.

The new iPhone applications are aimed at boosting revenue from data services. Apple, for instance, will charge $99 a year for its new MobileMe service, which sends e-mail, contact and calendar updates to users' devices.

Four of the applications demonstrated during the keynote were games, one was a consumer news applications, one was a social network product (Loopt), one was consumer shopping (eBay), one was consumer blogging (TypePad), one was sports information, and two were vertical medical.

Infact, Jobs kicked off the conference by talking about the iPhone for business users. He said that the iPhone now works with Microsoft's Exchange office server systems - a key feature if the iPhone hopes to seize market share from the BlackBerry. Jobs said that 35% of the Fortune 500 has participated in a beta program for business applications for the iPhone. But the demos were all related to consumer app.

What happens to iPod pricing? It's surprising that the price of the iPod Touch didn't change. It now looks more expensive than the iPhone, and it lacks GPS. I would not be shocked if the Touch ends up getting a price action this fall.

Since the original iPhone was introduced nearly a year ago, Apple has sold 6 million handsets, Jobs said Monday. The company has set a goal of selling 10 million handsets worldwide this year.