Apple has cut the price of its iPhone 3G with 8Gbyte of memory to $99, but the announcement came as no surprise after intense speculation ahead of the firm's 2009 annual developer conference.
As also widely expected, Apple unveiled the iPhone 3GS, but contrary to expectations, chief executive Steve Jobs was not present for the launch.
Jobs, who is on a six-month medical leave of absence, was expected to mark a return to duties at Apple with an appearance at the show.
The iPhone 3GS is built for speed, said Apple, enabled by hardware improvements that boost common functions such as the rendering of graphics.
As expected, the 3GS has better battery life, with Apple claiming it up to five hours of talk time and nine hours of Wi-Fi internet browsing.
The iPhone 3GS can be controlled by voice and can give "verbal" information about the music it is playing.
Apple has updated the camera to three megapixels from two megapixels in earlier versions. The iPhone 3GS can also shoot video at 30 frames per second.
The iPhone 3GS will be available in the UK and US from 19 June.
The iPhone 3GS will cost $199 for a 16Gbyte version and $299 for a 32Gbyte version in the US, but no information has been given on UK prices.