Apple Cuts iPhone Price and Revamps iPods :

Apple Cuts iPhone Price and Revamps iPods :

SAN FRANCISCO, Sept. 5 — Apple announced a price cut for its iPhone today, along with a new iPod that looks like the iPhone and a version of its iTunes store that downloads music directly to the player rather than a computer.
Justin Sullivan/Getty ImagesSteven P. Jobs, Apple’s chief executive, unveiled a new iPod at an Apple event in San Francisco.
A new iPod model has touch-screen controls and built-in Wi-Fi. Steven P. Jobs, the chief executive, called the moves a “total refresh” of the iPod line, and they signify a move to turning the music player into a hand-held computer.
The company dropped the price of its 8-gigabyte iPhone by $200, to $399. The company did not give a reason for the price cut, which analysts said has been selling very well.
Investors appeared to interpret the announcement negatively. Apple’s stock closed off more than 5 percent, at $136.76, and most of the loss came during and after Mr. Jobs’s presentation.
Mr. Jobs also displayed a new iPod model, the Touch, that looks like an iPhone, though it lacks calling capability. The 8-gigabyte model will sell for $299 and a 16-gigabyte model will sell for $399 later this month.
The new device has touch-screen controls and a built-in Wi-Fi antenna that allows it to connect directly to the Internet. It also has a browser, which makes it more of a hand-held computer than any other music player.
Users will be able to connect to a new iTunes Wi-Fi store from which they can download songs directly to their music players without having to connect to a computer.
Another feature of the iPod software will be the ability to alert a user entering a Starbucks coffee shop to the music being played there. If a person likes the song and wants to buy it on iTunes, tapping an icon on the screen will download the song.
Howard Schultz, Starbucks’ chief executive, said Starbucks stores in the United States are being equipped to manage this process. He said that stores in Seattle and New York City would have the capability by Oct. 2, and that other stores across the country would get the service over the next two years.
In other announcements, Apple announced a new iPod Nano, squatter than before, but with a bigger screen for viewing video. The 4-gigabyte model will sell for $149 and an 8-gigabyte model will sell for $199.
The company said the original iPod will be dubbed the Classic. An 80-gigabyte model will be sold for $249, and a 160-gigabyte model will sell for $349.
But it was the iPhone price cut that got the most attention, raising questions about the device’s continued success.
Apple executives insisted that the move had been planned long ago and that the pricing strategy was conceived in part to keep the iPhone’s pricing in line with its new iPod Touch. But the sharp price cut suggested that even Apple, which has long lived in a pricing bubble insulated from other personal computer makers, is not immune from the brutal pressures of the cellular phone business.
“My suspicion is that they got to 750,000 really quickly, and then it started to slow down,” said Van Baker, an industry analyst at Gartner Group.
Mr. Jobs had previously said that the company would sell its first million iPhones by the end of this month, and 10 million phones by the end of 2008. On stage today he reiterated the company’s goal of selling a million by the end of the month, but now at a much lower price.
“They have decided to become extremely aggressive,” Mr. Baker said.
Another breakthrough Apple product, the original Macintosh, initially sold briskly in 1984 and then stalled abruptly. The Macintosh market did not regain its luster until 1986 with the introduction of the Macintosh II.