iPhone gets faster and sexier – but will UK pay more?

Apple is to sell a new version of its iPhone with faster internet connection speeds and new applications for about £100, slashing the price of the gadget by more than a third.

After months of speculation, the US computer company's boss Steve Jobs confirmed the new 3G phone would cost $199 in the US. It will go on sale in 22 countries, including Britain, next month.

The phone's faster speed is designed to end one of the biggest grumbles about what has otherwise been regarded as a fine piece of technology. In an announcement that pulled a rabbit out of a hat at the end of the World Wide Developers Conference in San Francisco last night, Mr Jobs claimed the new phone would be twice as quick the existing model. He also said that it would be 36 per cent quicker than its fastest commercial rivals.

"Just one year after launching the iPhone, we're launching the new iPhone 3G that is twice as fast at half the price," said Mr Jobs.

The new model will also have GPS positioning, allowing users to use more direct services, such as locating nearby restaurants or shops. The current model uses a less accurate triangulation method.

The new model will have eight to 10 hours of 2G talk, five hours of 3G talk, seven hours of video and 24 hours of audio. It will go on sale on 11 July. Apple will soon announce a UK price.

Apple said its iPhone 3G would go on sale in more than 70 countries later this year, beginning with 22 countries – including the UK, Ireland, France, Germany, Ireland and Italy and Spain.

The device will use Wi-Fi, 3G and Edge networks, automatically switching between them to ensure the fastest download speeds.

Apple said: "The new iPhone 3G also makes it easier to multi-task with simultaneous voice and data communications, so with iPhone 3G you can browse the web, get map directions, or check your email while you are on a call."

Mr Jobs said there would be software upgrades for the phone, on sale in the UK through an exclusive tie-up with the mobile company 02.

"The thing for Apple is to be able to leverage the iPhone for further innovation, or they run the risk of being the next [Motorola] RAZR, which was iconic in its own way, but for which innovation did not come fast enough," said Shiv Bakhshi, director of mobility research for the market research firm IDC.

Avi Greengart, of Current Analysis, suggested 3G was important for the US but "essential for overseas". "It will be appreciated by technology enthusiasts and anybody who wants to get fast web browsing outside the hot spots," he said.

In the US, Apple deals with AT&T, though it has been looking to extend commercial relationships with other telecoms companies around the world.

Ben Reitzes, an analyst with Lehman Brothers, speculated that Apple might soon ditch its exclusive deals with mobile operators. "We think that Apple could talk about a very disruptive business model, or a change in their business model, embracing subsidies where necessary, and multiple carriers to help get the iPhone into more hands," he said.