New iPhone on Apple conference agenda?

Apple is expected to unveil updated software for the iPhone and may introduce new versions of the handset at its developers conference in San Francisco this week, intensifying competition in the smartphone market.

Along with the new software, the company may introduce a phone that has fewer features and costs less than the $199 iPhone 3G, said Shaw Wu, an analyst at Kaufman Bros. in San Francisco. Apple may also add a handset with better battery life and more storage, he said.

"Apple is arguably still the leader without new iPhones, but having new iPhone hardware models would definitely help improve its competitiveness," said Wu, who recommends buying Apple stock.

CEO Steve Jobs, who is on medical leave, has been actively involved in preparations for today's event, said a person familiar with the matter who asked not to be identified.

The main address at the developer conference, which begins today, has featured Jobs each year since 1998.

But this year's keynote address will be given by marketing chief Philip Schiller, Apple said last month.

Apple declined to comment on new iPhones or whether Jobs, 54, may make an appearance at the event, said Steve Dowling, a spokesman for the Cupertino, Calif.-based company. "We look forward to Steve returning to Apple at the end of June," he said.

Jobs announced Jan. 5 that a hormone imbalance was "robbing" him of the proteins he needed to stay healthy, causing him to lose weight throughout 2008.

Nine days later, Jobs, who had successful surgery to remove an islet-cell neuroendocrine tumor in 2004, said his medical problems were "more complex" than he originally thought.

He announced his leave and handed over day-to-day duties to operating chief Tim Cook. Jobs said he would remain involved in major strategic decisions.

If Apple doesn't release a new iPhone, the company may hold another event to introduce new models and mark Jobs's return, said Gene Munster, an analyst at Piper Jaffray in Minneapolis.

He expects Apple to add a phone, costing $99 to $149, that has less storage and fewer features than the current models.

Munster also predicts Apple will introduce a more expensive version that has longer battery life, 32 gigabytes of storage and a video camera.

Jobs announced the iPhone in January 2007. He used the Apple developers conference in June that year to demonstrate the phone's features, a few weeks before it went on sale.

A year later, he unveiled a faster, thinner model called the iPhone 3G, which went on sale in July.

AT&T, the exclusive provider of iPhone service in the U.S., could add lower-cost service plans for the new iPhones to appeal to more budget-conscious buyers.

Today, customers in the U.S. typically sign up for a two-year wireless contract with Dallas-based AT&T. They start at $70 a month.

Mark Siegel, a spokesman for AT&T, declined to comment.

Apple has sold more than 21 million iPhones and sells the device in more than 80 countries.

It's now the No. 2 smartphone among consumers in the U.S., after Research In Motion's BlackBerry, according to NPD Group in Port Washington, N.Y.

Smartphones are handsets that offer some computer functions, including the ability to surf the Web and check e- mail.

Palm's Pre

New iPhones could also help Apple fend off competition from Research In Motion and Palm.

Last week, Sunnyvale, Calif.-based Palm started the Pre, a touch-screen phone that comes with a keyboard. Initial reviews have been strongly positive.

Apple is working on a new operating system for the iPhone called OS 3.0, and said it will use the developers conference to give programmers a deeper look into the software.

Apple says the program has more than 100 new features and will be released this summer.

The company will also use the event to show Snow Leopard, a new version of the Mac-operating system due later this year.

Microsoft's Windows 7 will go on sale on Oct. 22.