By Maggie Shiels
Technology reporter, WWDC San Francisco
Apple's updated iPhone 3GS includes the ability to shoot video and a digital compass
There has been mixed reaction to Apple's announcement of a speedier new iPhone and moves to cut the price of the year old 3G model in the US.
News of the updated iPhone 3GS handset was made at the company's annual developers conference in San Francisco.
Apple said improvements in the iPhone 3GS made common tasks, such as launching applications, much faster.
But veteran tech journalist Steven Levy of Wired Magazine said: "It's not a game changer."
Rumours of an update to the iPhone have been circulating prior to the start of Apple's World Wide Developers Conference (WWDC).
When it was finally unveiled more than an hour and a half into the keynote speech, few were surprised.
"We have been trained to think that when one more thing comes out it is going to rock our world and that didn't happen," said Mr Levy.
Ernest Doku of comparison site Omio was more effusive.
Rory Cellan Jones, Technology Correspondent,
O2 has retained its exclusivity over the iPhone but it looks as though that was at a price, and one that is now being passed on to consumers.
If you sign up to an 18-month contract for the new phone, at £34.26 a month, you'll still pay £184.98 for the 16gb version or £274.23 for the 32gb handset. Is there another phone that will cost you that much when you sign up to a chunky contract?
It's the early adopters, those who bought the original iPhone and then upgraded to the 3G version, who are really spitting tacks.
They somehow thought they were special, and, just as last time, would be offered a deal to make upgrading to the 3GS affordable. But no.
"Majorly cool has just become mass market," he said "Essentially the 3GS is a refinement of the existing device so not all worlds will be rocked but as usual with Apple there are some big reasons to be excited.
"Features like data encryption, improved data speeds and increased battery life will attract users. With faster web browsing and the ability to record and upload video to YouTube, the 3GS will get more people using their mobiles to go online than ever before.
"It's the must have multi-media device," said Mr Doku.
Phil Schiller, who unveiled the phone to WWDC attendees, said the phone would speed up almost everything owners did with it. "For example," he said, "loading a game like Sims City, 2.4 times faster. Going to a graphically intense website like the New York Times, 2.9 times faster."
Mr Schiller also announced improved battery life giving the iPhone 3GS five hours of talk time and nine hours of internet surfing.
Other much expected features included a video camera, the ability to shoot video and a digital compass.
Initial reaction to the iPhone 3GS from developers was positive.
"We are excited to make use of anything and everything we can get our hands on to make our applications more compelling and perhaps a bit more magical," said Dr Ge Wang, founder of Smule that creates applications for the iPhone such as Ocarina and Leaf Trombone.
The device goes on sale in the US, parts of Europe and the UK on the 19th of June. In the US it will cost from $199 (£124) for a 16GB version and $299 (£186) for a 32GB version. However, outside the US the iPhone may be more expensive than direct comparisons suggest.
The price cut applies to the 8GB iPhone 3G which will cost $99 from 19 June. However, UK iPhone operator O2 has confirmed that the price cut will not apply in the UK.
Apple also said its new operating system for the iPhone and iPod Touch will be available from June 17th.
Among the 100 new features the 3.0 software offers is the much demanded ability to cut, copy and paste.
The new upgrade is the third major version of the iPhone operating system
Also included is "tethering" which will allow users to connect their computer to the internet via the phone's wireless connection. Other changes centred on an upgrade to Safari and improvements in search.
"These are all iterative improvements but that is not a bad position to be in," said Van Baker, a senior analyst with Gartner.
"Is it earth shattering compared to what was there before? No. But did it need to be? No," stated Mr Baker.
David Pogue of the New York Times was more effusive in his assessment.
"These are excellent upgrades - maybe not enough for you to switch from the iPhone 3G, but definitely enough to keep the iPhone at the top of most people's wish lists."
But is it enough to see off the competition being presented by the new Palm Pre smartphone which went on sale in the US this weekend to rave reviews? It was described by the Wall Street Journal as the iPhone's "strongest rival to date."
"The Pre really outshines the iPhone when it comes to multi-tasking," said Wired's Mr Levy.
"But right now I would never switch because the iPhone has these thousands of applications that I use a lot. That remains the real test for the Pre. Will developers develop for it?" questioned Mr Levy.
Apple revealed at the conference that the app store is now home to over 50,000 applications.
Jobs no show
The keynote was Apple's first big event since its co-founder and ceo Steve Jobs went on sick leave back in January.
A thin looking Mr Jobs at last year's WWDC reignited health concerns
Five years ago he successfully fought pancreatic cancer but at last year's WWDC he appeared thin and gaunt giving rise to fears that his cancer had returned.
The rumour mill went into over drive ahead of this conference with talk of Mr Jobs coming on stage for a surprise appearance. In the end that did not happen and industry watchers say that was the right move for Apple.
"The news has come out already that Steve Jobs is doing okay and coming back to work, but he was really ill," said Gartner's Mr Baker.
"I don't think Steve would want to do a cameo that would undercut this keynote so I am not surprised he didn't take centre stage."
Apple have sent out strong signals that Mr Jobs will be back at work as planned at the end of June.
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