The New iPhone

"Why are you running?" asked a woman dressed in a bright green T-shirt with the Apple logo as she tried to slow down attendees rushing to their seats at Apple's Worldwide Developers Conference in San Francisco.

But that's how excited these Apple devotees were to hear CEO Steve Jobs' announcement. And while he made them wait two hours for the big news, I'll cut to the chase. Apple's new iPhone, loaded with 3G technology and third-generation wireless networks, will run twice as fast but cost only half as much -- $199 -- as earlier incarnations.

The slower iPhone currently retails at $399, but the new version will be available starting July 11.

Click here to read the transcript of ABC News correspondent Neal Karlinsky's interview with Steve Jobs.

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But that's not the whole story. If you've never attended or watched one of these rollout presentations online, they are something to behold. A well orchestrated performance that resembles more of a rock concert than software presentation, beginning with the classic rock tunes that filled the hall as the giant doors rolled open to let in the crowd.

It was standing room only, so the event was broadcast on screens throughout the Moscone Convention Center so all 5,200 attendees at the sold-out convention could watch. It was also simulcast on Apple's Web site.

People held up their iPhones to snap pictures of the overflow crowd and the stage with the giant screen displaying the Apple logo. And there was a roar of approval when the huge television screens displayed a shot of former Vice President Al Gore, the man who once claimed to have invented the Internet.

But the biggest applause was reserved for the man of the hour, Jobs, who took the stage in blue jeans and a black shirt and understatedly told the audience, "We've been working hard on some things that I want to share with you."

A picture of a three-legged stool flashed on the screen behind him as he explained the three primary parts to Apple: the original Mac; music, including the iPod and iTunes; and the iPhone, which is approaching its one-year anniversary.

And in that one year, Jobs said they've sold six million iPhones. He called it a project, "near and dear to his heart," and devoted the entire two-hour keynote address to its newest version.

Since this is a developers' conference, Apple Vice President Scott Forstall introduced the new tools that will let developers build applications on the iPhone "the same way we (Apple) do."

He called up several guest speakers who showed off what they developed for the new iPhone -- everything from interactive games to watching baseball highlights, seconds after they occurred, to medical applications.

Sega's Ethan Einhorn took the crowd through a game called Super Monkey Ball, which apparently can be quite addictive. As Forstall said after the demonstration, "productivity has just deteriorated."

The fact that Apple is reaching out to the gaming community surprised some conventiongoers.

"Apple has not been strong in gaming," said Benjamin Stahlwood from Ft. Pierce, Fla. But he was impressed with the resolution of the games on the iPhone.

The biggest crowd pleaser, though, came from an Englishman who works in insurance and only dabbles in development. His product -- called cow music -- gives iPhone users a way to play instruments on their iPhone, including the drums and piano, even an entire blues band -- all with one simple interface.

"That was so cool," said Michelle Stone, a conference attendee from Pasadena, Calif.

But perhaps the most impressive use of the new iPhone on display was the medical application, which would allow doctors and patients to see medical digital scans on their iPhones in color and intricate detail.

"The medical imagery is an incredible tool," said Glenn Martin from Ft. Pierce, Fla.

After the demonstrations, Jobs took the stage again to unveil the new features of the iPhone, including a slimmer design, better chip technology, and global positioning technology that allows users to track themselves as they drive.

"I don't know if I'll ever use that feature," Stone said. "But I want it."

In fact, Stone said she was texting her husband -- on the "old and now outdated" iPhone she's had just since February -- that she's ready for the newest version.

Jobs explained one of the challenges for Apple was to get the iPhone into more countries. And while the initial rollout is for 22 countries, Jobs had a global map flash behind him, and to the tune of "It's a Small World," highlighted one by one, the 70 countries he eventually hopes to reach with the iPhone.

Jobs said he listened to consumers' complaints about data download speed, and waited to use the 3G technology until it was better designed so as not to drain the battery. Now, with its faster speed, Apple is positioning the iPhone to compete with the ever-present BlackBerry and become not just a cool gadget, but a workplace tool used for PowerPoint presentations and downloading documents.

The new version will be a free upgrade to current iPhone users. But Jobs hopes the lower price tag of this latest version, which he introduced with a drum roll, will bring a whole new wave of consumers to Apple.

"It was a bit more than we were expecting," Martin said after listening to Jobs' address. "Especially the price tag."

Jobs' ability to surprise even the Apple faithful is clearly what keeps them coming back for more. One almost expected the crowd to hold up their lighters and ask for an encore.

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