Update: Apple picks Cingular to sell iPhone

The Apple iPhone unveiled Tuesday, described as jaw-dropping by one analyst, will be offered exclusively in the U.S. through Cingular Wireless LLC, both companies announced at the Macworld Conference & Expo in San Francisco.

The iPhone will be available starting in June through Cingular and Apple online and physical stores. The iPhone carries a list price of US$500 for a device with a 4G-byte hard drive or $600 for one with an 8G-byte hard drive. Those prices require a two-year Cingular service contract at extra cost. Carriers and handset makers usually discount the phone’s price from the list price for customers who sign a service contract, but Apple did not reveal the list price of the phone.

Apple Inc., the new corporate name replacing Apple Computer Inc., said the iPhone will be available in Europe in late 2007 and in Asia sometime in 2008.

The iPhone will operate on Cingular’s EDGE data network based on the GSM (Global System for Mobile Communications) wireless platform. The iPhone also supports 802.11b/g Wi-Fi and Bluetooth 2.0 wireless technologies.

The exclusivity agreement between Apple and Cingular was ambiguously described as “multiyear.”

“That’s one of those terms of the contract that we mutually agreed not to discuss,” said Cingular spokesman Mark Siegel.

Although some new phones are initially sold just by one carrier, many of them eventually end up being offered by multiple carriers. But Siegel said this deal is different.

“In today’s business environment, a multiyear commitment is a serious one and obviously that shows that we have great faith in Apple and that Apple has great faith in us,” he said.

Siegel also emphasized that, contrary to prior speculation, this is not a Mobile Virtual Network Operator (MVNO) arrangement, in which a company leases network access and brands the phone and the service as its own. Given the significance of the phone Apple was developing, “the only way we (Cingular) were going to achieve what we thought we could achieve with this extraordinary device was for it to be a full partnership.”

Besides the phone, the device also includes a camera, a video iPod, address book, calendar and other organizer functions, and a Web browser more robust than that available on other smartphones.

“This phone rightfully drops jaws,” said Roger Entner, a mobile phone industry analyst with Ovum Ltd. “This is going to raise the bar.”

Entner was surprised that Cingular agreed to sell the iPhone, as their last collaboration with Apple didn’t go so well. Cingular carried the Rokr phone made by Motorola Inc. that was the first mobile phone installed with Apple’s iTunes service for downloading and playing music.

“Rokr force-fitted crippled iPod software onto an old [phone] platform. That phone was a disappointment all around,” Entner said.

The iPhone will likely be much more successful and will challenge other smartphone makers such as Palm Inc. and Research In Motion Ltd. to improve their smartphones, he said.

“IPhone is a revolutionary and magical product that is literally five years ahead of any other mobile phone,” said Steve Jobs, Apple’s chief executive officer. “Today Apple is going to reinvent the phone.”

Also at Macworld, Jobs unveiled AppleTV, a device that enables content purchased from Apple’s iTunes download service to be transferred wirelessly from a computer to a widescreen television.

The $299 set-top box, which will be available in February, includes a 40G-byte hard drive to store up to 50 hours of video, 9,000 songs, 25,000 photos or a combination of each, he said.

Jobs emphasized the simplicity of the AppleTV design: “Just like you can set up an iPod, you can set up an AppleTV.”

Jobs first disclosed his company’s plans to build a set-top box at a press event last September. At the time, the product was code-named the iTV.

Apple’s bid to link the computer and the TV was preceded two days earlier by a similar announcement from rival Microsoft Corp. Chairman Bill Gates in a keynote address at the Consumer Electronics Show (CES) in Las Vegas. Later this year, Gates said, AT&T Inc., which offers an Internet TV service, will make it possible for consumers to use Microsoft’s Xbox 360 gaming console as a set-top box to deliver movies and other video content to their TV.