With co-founder and CEO Steve Jobs absent until his medical leave is over at the end of June, Apple's biggest unveiling at its annual conference for software developers was a new model of the iPhone, the 3G S.

It looks the same but sports a faster processor, longer battery life, an internal compass, a video camera and a photo camera with better resolution and auto-focus.

A 16-gigabyte version of the 3G S will cost US$199 and a 32-gigabyte version will be US$299.

The eight-gigabyte iPhone 3G, which came out last year, now costs US$99, instead of US$199.

When the iPhone debuted two years ago, eager Apple fans had to shell out US$499 for a four-gigabyte version and US$599 for eight gigs.

Apple is known for ending events with a last-minute surprise, leading to some anticipation that Jobs might make a cameo in Monday's two-hour presentation.

But he did not take the stage, and Apple's top marketing executive, Philip Schiller, exited without uttering the company's signature line that there would be "one more thing".

The latest iPhones go on sale June 19, just as two-year contracts for the buyers of the original models are expiring and Apple faces tougher competition from the likes of Research in Motion Limited and Palm Inc.

Palm came out a week ago with a well-regarded iPhone rival, the US$200 Pre.

Industry analyst Michael Gartenberg, with the Interpret market-research firm, said the new iPhone pricing breaks through an important barrier for consumers.

It will likely cause other smart phone makers to offer something similar, he said.

psychological price point

"Every US$100 you move down in consumer electronics brings in a lot more customers," he said. "Ninety-nine dollars is a psychological price point, so that's a real barrier to move through. It becomes something people can afford - it becomes an affordable luxury."

Schiller said in an interview that US$99 iPhone will reach people just joining the smart phone market.

For its MacBook line, Apple showed off new laptops that boast longer battery life and faster processors. The company rolled out a new 13-inch MacBook Pro that starts at US$1,200, or US$100 lower than an existing similar notebook, and a 15-inch Macbook Pro that starts at US$1,700, which is US$300 less than the current model.

It also lowered the price on the ultra-thin MacBook Air to US$1,500 from US$1,800.

- AP