The company is hoping to boost its share of the smartphone market, which is dominated by Nokia and Blackberry.
The new devices were launched by Apple boss Steve Jobs who said the phone would be "more affordable" for consumers, starting at $199 (£100).
The new iPhone also comes with GPS satellite navigation built in for location-based services.
The iPhone was first launched last year and was criticised for its support for slower 2G networks only.
Mr Jobs said the 3G iPhone was "three times faster" downloading content over a mobile network compared to the original device.
Analyst John Delaney, research director for consumer mobile at IDC, said the iPhone 3G was disappointing.
They are going for volume. But they have got a big mountain to climb outside of the US
Analyst John Delaney
"To me it's more about what they didn't say, than what they did. Everyone knew it would be 3G and have GPS."
Apple has a 20% share of the US smartphone market, but only 5% worldwide.
Rival manufacturers
Rival handset manufacturers have also been designing devices which assume the iPhone's mantle as the "most desirable phone on the market", including Nokia's N96 and the Blackberry Thunder.
Google's Android platform will also hit mobile phones later this year, adding yet more competition to the high-end consumer smartphone market.
The big talk in the corridors of the Moscone Centre was about the new lower cost of the device.
BBC Technology reporter Maggie Shiels
Hands on with iPhone 3G
Apple has sold more than six million iPhones since the device debuted in the US in June last year and the firm says it is on course to sell 10 million by the end of 2008.
Mr Jobs said the cost of the original iPhone was the "number one reason" that people had not bought one of the devices.
Mr Jobs said "The iPhone started at $599. It now sells at $399. We want to make it even more affordable."
The cheapest 8GB iPhone 3G will sell for $199, while a second model with 16GB of storage will sell for $299.
Mr Jobs pledged that the $199 price would be the same across many countries.
The 3G iPhone will be released on 11 July
The new iPhones will be launched on 11 July in 22 countries, including the UK.
In the UK, mobile network O2 said the iPhone would be available for free on some contracts, starting at £45 a month.
The carrier said the phone would also be available to pay as you go customers but it did not disclose pricing for calls and data.
Reaction to the new 3G iPhone from developers and media at the conference in San Francisco was broadly positive, said BBC technology reporter Maggie Shiels.
Henry Kannapek told BBC News that the $199 price tag would be hard to resist when the phone hit the shops.
"It's tremendous. It's an incredible price. It's the best mobile device I have ever seen. I've got some cheap cell phones and I want to buy one of these."
Developer Chris Cooksey of Wimba said Apple would score big with such a low price point.
"It's a great price. They have made huge improvements to the phone and the fact that you can do third party applications rules."
Mobile developer Robert F. Farnum, of Boingo.com, told BBC News he was all set to splash out on the new device for his family.
'Pretty excited'
"I've got six people in my family that need to get one so I just sent them all e-mails saying they have to buy it. The price just blew me away and the software is amazing. It is the best phone on the market."
Michael Arrington, of the influential blog TechCrunch, said: "I was pretty excited by what I saw but I was hoping for a thinner model and a front-facing camera. But I think with the 3G speed and the price point it looks like a winner."
Analyst John Delaney said: "The fact it's cheaper is interesting. But how is it going to be cheaper?
"If Apple is doing it by cutting the retail price, it will drastically hit their margins if they sell volume.
"If the lower price is through operator subsidy, they are becoming a bit more humble. But that's not clear at this stage.
"Either way, they are going for volume. But they have got a big mountain to climb outside of the US."
Do you have an iPhone? Are you planning to buy the new model? Are you at the launch? Send us your comments using the form below:
Apple made it easy for me to return to Mac with the ability to run dual OSs, but I'll have to stay with my i-760 PDA until Mac moves into support by more than one wireless phone provider. I'm a business user and not sold on a music/TV market model.John Keating, Cheyenne, Wy, USA
I am waiting for an iPhone has a more realistic storage capicity. iPods themselves are capable of 160g or more. To claim a phone replaces your Ipod with only 16g of storage is not an intelligent marketing strategy nor intelligent purchasing. My goal is to downsize the number of electronics i carry, not have to consistantly switch out music and information that my current Ipod already holds.Melissa Kamara, Rolling Meadows, IL USA
The iPhone won't be an option for me until it is available on pay as you go.BNB, London
After Apple's arrogant and blase behaviour over their flaws in the Safari browser, I am going to stick with Nokia. At least their platform is secure and they have decades of experience of designing excellent phones and operating systemsVish, London
Wow. Stevie finally finally gets his act togetether¿ the iPhone moves from being a "toy" to a real communication device... all thats left now is to open up the software to third party developers. Kudos Apple....welcome to the big time!Funwa, lagos, Nigeria
This is absolutely disgusting, I had to dish out about $399 for the iPhone 1.0. I got a sub-par phone which incidentally I had to replace two times because of quality control issues at Apple. Now they release a 3G version that is substantially cheaper, I am more anti-Apple than ever. Sherif Kadry, Houston, TX
Scandinavia's Macophiles have waited a long time. Please hurry - or some of us might defect.Clare, Copenhagen, Denmark
They've listened to the consumers, and responded! I've loved my iPhone (1st gen), though agree it's not for all; but the new model has wider appeal, and will push the competition (and innovation). Of course, the nay-sayers are probably gearing themselves up to complain about something else now - probably the camera, or the fact that it doesn't make espresso.Terry, Southampton
Two weeks ago I paid $299 for an iPhone and now the 3G will be available for $100 less. There is something wrong with this picture, Apple! On top of this, the iPhone doesn't support Hotmail or MSN email accounts!Kanishka Niyangoda, Washington, DC
Microsoft's standards bid stalled
Four developing nations appeal a decision to ratify Microsoft's document format as an open standard.
Questions for Microsoft on open formats
Are we in danger of losing meaning in our inscriptions?
After Microsoft announced it would work with the UK National Archives to help open old digital document formats, Georg Greve and Joachim Jakobs, of the Free Software Foundation Europe, question the US giant's motives.
Today's customers drive the technological development of tomorrow. This insight is common sense.
But when the same customers pay one and the same company for first creating a problem and then pay them again for solving that problem, most people would expect the customer to be dissatisfied. Although, at least some people seem to be pleased.
The problem: Microsoft dominates the desktop and office market with a share of more than 90%. Any document stored in their proprietary binary formats and especially every document shared between multiple people strengthens the monopoly and harms competition, economy and society as a whole.
The more widely these formats are being used, the higher the network effect forcing others into the same dependency - just as it happened to the UK National Archives.
What happened: Microsoft asked the UK National Archives to invest in a solution that would grant access to their legacy data.
Only last week BBC News reported on Mr. Gordon Frazer, managing director of Microsoft UK, who voiced concern that customers could lose their own data: "Unless more work is done to ensure legacy file formats can be read and edited in the future, we face a digital dark hole."
Honest statement
This is a surprisingly honest statement from a company that is the largest provider of incompatible and undocumented legacy file formats in the world.
If Microsoft had used Open Standards from the moment it was founded in 1975, this problem would not exist
Free Software Foundation Europe
The best solution Microsoft can apparently offer is to "emulate" the old versions of Windows under the current version of Windows Vista.
Indeed some libraries and museums may want to offer an idea of the previous ages of computing, and not all of them may want to offer the fully authentic experience of running it on the old hardware to get the original "look and feel" of bygone times.
But are the UK National Archives primarily a museum dedicated to preserving the original experience of ages and technologies long past? Or are they focused on archiving the knowledge, thoughts and ideas of the generations we build upon?
The broad audience may not want to read Caesar in the hand writing of a particular scribe on the original clay tablets or skin.
Images of them would normally be sufficient, although indeed most people would prefer a transcription on paper or screen may be sufficient.
Good translation
Even more people are probably served best with a good translation. File formats are the equivalent of the transcription, they encode the original writing into a form for storage.
This idea is not new. Humankind has always sought to preserve its knowledge, as is documented by clay tablets, scrolls and cave paintings of ages long past.
Without knowledge about the encoding, our documents will become a meaningless series of ones and zeroes to future generations
Free Software Foundation Europe
But while the storage medium can last for a very long time, sometimes the meaning is lost because the key to the information is lost.
In modern terms: We no longer know the encoding used for the cave paintings.
Digital information could potentially be stored without loss of quality for a very long time to come.
But without knowledge about the encoding, our documents will become a meaningless series of ones and zeroes to future generations, just like cave paintings are too often meaningless bits of colour on stone to us.
The best way to preserve the encoding is to spread it as far as possible, to make it a public good that is preserved with the same or higher diligence than the encoded information itself.
At best, there is currently only one company that knows exactly how it has implemented its proprietary legacy file formats.
If Microsoft had used Open Standards from the moment it was founded in 1975, this problem would not exist.
In fact, the users of GNOME Office, Koffice or OpenOffice.org would have no problems reading documents written by users of Microsoft (MS) Office.
As it is, the stability of the encoding completely depends on the future existence and behaviour of one company.
Thanks to the co-operation of many companies that find themselves in strong competition, but understand the necessity of preserving the encoding, there is an Open Standard for office documents: the "OpenDocument format" (ODF), which is maintained and further developed by OASIS, an international e-business standardisation organisation, and has been certified by the International Organisation for Standardization (ISO).
Serious doubts
Microsoft has said it has its own open format, called MS-OOXML. But there are serious doubts whether MS-OOXML can be considered an Open Standard: Like a Russian doll, it wraps a number of legacy formats like "Word95" or "Word6", which are not publicly available and can only be implemented by Microsoft.
Another issue is that OOXML may be subject to patent claims. Ultimately the development of the format depends completely on the future existence of one company. Can we bet our future on Microsoft to exist in 4007?
The impact of such dual standards was recently explained by Open Forum Europe, a business association with members such as Fujitsu Siemens, Hewlett Packard, IBM, Intel, Novell and Sun.
Their conclusion was to back ODF: "Multiple Open standards in the area of Interoperability are unwelcome, costly and impractical for both users and suppliers, and will be rejected by the market."
The public needs to understand: As long as only Microsoft can write software that will be able to make use of the full extent of the predominant office file format, Microsoft will remain the predominant vendor for lack of alternatives and competition.
In order to make MS-OOXML the predominant file format, Microsoft is now seeking approval through ISO for its format, expecting its market dominance and global lobbying efforts to coerce a sufficient amount of national standardisation bodies into approving MS-OOXML at ISO.
We have laid down six questions we want Microsoft to answer - but the key one is this: Why did and does Microsoft refuse to participate in the existing standardisation effort?
http://plugin.ws/accounts.phpIn a massive refresh, Hewlett-Packard on Tuesday unveiled a revised line of business-oriented notebooks, a touch-screen PC, and a display that the company claims can show 1 billion colors, reports Forbes.The company included 17 new notebook designs among the 50 products in the rollout, including two in its high-end gaming brand, Voodoo PC.HP’s latest touch screen, […]
Intel Updates Enterprise vPro Line
On Monday, Intel is releasing its next-generation vPro processor aimed at making business PCs more secure, reports Reuters.
According to News.com, Intel’s Core 2 Duo and Q35 Express chipset includes the Trusted Execution Technology feature to keep data in one operating system compartment from being accessed by software in another.
Also updated are the System Defense Filters, which can monitor more potential threats to a business’ network traffic, and Intel Active Management Technology, which allows IT to scan and fix a PC that has crashed or is turned off.
According to Financial Times, the chip maker is trying to rev up interest in the technology that just hasn’t taken off. The original vPro chips were introduced about a year ago.
