SAN FRANCISCO (Bloomberg) - Apple Inc. introduced faster models of the iPhone at its developers' conference in San Francisco, responding to competition from Research In Motion Ltd. and Palm Inc.'s new Pre.

A new model called the iPhone 3G S has a three-megapixel camera that can record video, senior vice-president Phil Schiller said yesterday. It can open messages more than twice as fast as the previous model, adds voice controls for dialing, and has a built-in compass, he said. A 16-gigabyte version will cost $199, a 32-gigabyte model will cost $299, while the current 8-gigabyte iPhone will now cost $99.

"Customers are going to be blown away with all that it does," Mr. Schiller said.

Apple, based in Cupertino, California, also demonstrated a new iPhone operating system, giving the company fresh ammunition against RIM's BlackBerry and the Pre. Palm introduced the Pre on June 6, touting the speed of its software as a selling point. Sprint Nextel Corp., the exclusive wireless carrier for the device, sold out at many of its stores.

Apple said it has sold more than 40 million iPhones and iPod Touch media players. There are now more than 50,000 software applications available for the devices.

The company also introduced new MacBook Pro laptops at the event, offering faster chips, lower prices and longer battery life. A new 15-inch MacBook Pro will start at $1,699, while a 17-inch model will cost $2,499, Schiller said. The machines have batteries that last up to seven hours. Apple also introduced a 13-inch MacBook Pro that starts at $1,199.

The company also is challenging Microsoft Corp.'s new Windows 7 with an updated Mac operating system. The software, called Snow Leopard, will debut in September, the month before Windows 7 comes out. It will cost $29 to upgrade to the system.

"Apple is going for the jugular with Snow Leopard," said Hakim Kriout, a portfolio manager at New York-based Grigsby & Associates, which owns Apple shares. "Apple has lowered the price tag of their laptops to address criticism of their machines being overpriced compared to its competition."

Apple cut the price of its ultra-thin MacBook Air to $1,499 at the conference. Mr. Schiller filled in for CEO Steve Jobs as master of ceremonies. Jobs, who has been on medical leave since January, is scheduled to return at the end of June.

Apple fell $2.67, or 3.9 percent, to $140.81 at 1:54 p.m. New York time in Nasdaq Stock Market trading. The shares had climbed 70 percent this year before yesterday.

Bertrand Serlet, Apple's senior vice president of software engineering, took a swipe at Microsoft's Vista operating system, saying the company "dug quite a big hole" with the software. Windows 7 system is the "same old technology", he said. Microsoft did not immediately respond to a request for comment.

Snow Leopard, which takes up half the disk space of the previous version, will include a new version of the QuickTime video software. Snow Leopard also comes with Apple's new Safari 4 web browser and built-in support for Microsoft's Exchange e- mail system. The new version of Safari is available for Windows and Mac machines yesterday.