Apple halves iPhone to $99 to galvanize sales

By Alexei Oreskovic and David Lawsky

SAN FRANCISCO (Reuters) - Apple Inc halved the price of its entry-level iPhone to $99 on Monday in a move that could widen the trendy device's mass-market appeal as competition for smartphones heats up.

The company also unveiled a new iPhone that takes videos and has voice features, matching offerings by rivals Palm and Research in Motion's BlackBerry.

Analysts said sales could double for the lower-priced iPhone.

Chief Executive Steve Jobs, on medical leave since January, did not put in a much speculated-about appearance.

The next-generation iPhone 3GS -- the "S" stands for speed, double that of the original model -- goes on sale in the United States, Germany and other countries on June 19 for $199 to $299.

"They plugged the hole in the offering of the 3G iPhone," Gartner analyst Van Baker said, referring to the new features.

A lively crowd convened at the event in downtown San Francisco, whooping and applauding throughout the conference as Apple executives unveiled everything from a much-cheaper Mac Air notebook to fresh operating system software.

Shares in Apple closed 0.6 percent down at $143.85 -- after a 6.5 percent climb in the week leading up to the highly anticipated event -- as Jobs failed to show and investors debated the merits of the sharp iPhone price cut.