SAN FRANCISCO - Apple Inc. on Wednesday cut the price of the top iPhone by $200, discontinued the low-end model and unveiled a new version of its popular iPod media player with wireless Internet access and other iPhone features.
The 8-gigabyte iPhone will sell for $399, and the 4-gigabyte model, which sold for $399, will be phased out. The new iPods with Wi-Fi - but without cell phone capabilities - will start at $299.
"We want to put the iPhone in a lot of stockings this holiday season," CEO Steve Jobs said at a special media event near downtown San Francisco.
Jobs also unveiled the iPod Touch, which allows users to download songs wirelessly, and, eventually, at all Starbucks in the United States that offer Wi-Fi Internet.
The iPod Touch is just less than one-third inch thick and can store photos, music, videos and other digital data. It features the same 3.5-inch, touch-screen display as the iPhone, on which light finger touches allow the user to scroll through menus and resize pictures with two fingers.
The iPod Touch includes the Safari Web browser, with Google and Yahoo search engines and easy access to YouTube videos.
The iPhone, which runs on the AT&T cellular network, also includes Wi-Fi.
An 8-gigabyte version of iPod Touch will cost $299. A 16-gigabyte version will cost $399. They will be shipped worldwide starting later this month.
"It's one of the seven wonders of the world - it's just incredible," Jobs told employees and journalists gathered at a special media event.
People using the iTunes Wi-Fi store will be able to download songs for the same price as the regular store, which charges 99 cents per song.
Starting in October, the Starbucks icon will light up on the iPod Touch whenever a user nears a Starbucks coffee shop that has Wi-Fi access. Users can then download the song that's playing overhead or get a list of the 10 most recent songs played.
The Starbucks partnership - which executives at both companies have been working on for two years - begins at 600 stores in New York and Seattle on Oct. 2.
In November, it will be available at 350 stores in the San Francisco Bay Area, and by the end of next year it will be in all Starbucks with Wi-Fi nationwide.
Although financial terms of the deal weren't disclosed, the agreement could significantly boost revenue for both companies by providing a physical location that's download-friendly.
Jobs also unveiled other new versions of the company's market-leading iPod, including an iPod Nano with a 2.5-inch video monitor for watching movies and playing built-in games. The current version has a 2-inch screen but does not play videos.
"It's incredibly tiny. It's incredibly thin," Jobs said of the new Nano, which features a 320-by-240-pixel screen with 24 hours of audio playback. "We think it's really, really beautiful."
The new Nano, which will be in stores starting this weekend, will come in a 4-gigabyte version for $149, and an 8-gigabyte version for $199.
Apple also announced it will be selling ring tones for the iPhone for 99 cents, plus the 99-cent cost of the song. Ring tones from more than 500,000 songs available on iTunes will go on sale next week.