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By Tom Krazit, 5 February 2008 16:25

NEWS

Apple has announced it has doubled the capacity of the iPhone and the iPod Touch for an additional $100.

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The iPhone once again comes in two capacities: 8GB for $399 and now 16GB for $499. Apple sold 8GB and 4GB varieties at first but discontinued the 4GB model after it cut the price of the 8GB model to $399. Nearly 90 per cent of all early iPhone buyers opted for the 8GB version.

Apple thinks there's still room for an 8GB iPhone in the mix, said Greg Joswiak, Apple's vice president of worldwide iPod and iPhone product marketing. The first time around, people signalled pretty clearly they wanted more than 4GBs of storage, but Joswiak thinks there's still a "sweet spot" at 8GBs of storage.

And the iPod Touch can also store more music and videos now, with 32GB of capacity for $499. The Touch is now available in three versions, with Apple also selling a 16GB model and an 8GB model.

The new iPhone and iPod Touch appear to be unchanged from their previous incarnations, though they ship with the new software unveiled at Macworld, which provides users with the ability to edit the home screen and triangulate their position using Maps.

The release of that software really changed the iPod Touch into a new type of device, Joswiak said, and Apple is now playing up the iPod Touch as a "wi-fi mobile device", as opposed to a high-end iPod. He said: "It becomes even more promising once we enter the world of the SDK," referring to the release of the software developer's kit for the iPhone and iPod Touch expected in late February.

Both are available immediately. This move should give something of a boost to iPhone and iPod Touch sales. Apple shipped fewer iPods than expected during the fourth quarter but still grew iPod revenue at a strong pace, suggesting the higher-priced iPod Touch is gaining ground against the iPod Nano and Shuffle as a percentage of Apple's iPod mix.

The iPhone story is a little more complicated. The rampant unlocking of the smart phone makes it both harder and easier to understand iPhone demand. On one hand, people want the iPhone so badly, they are willing to take risks to use it on another network or country. On the other hand, it's almost impossible to get a true number of how many phones have been unlocked.