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Wednesday, April 25, 2007, 02:00 pm PT (05:00 pm ET)

Apple to build new features into iPhone, Apple TV free of charge

Apple said Wednesday it will leverage its proven capability in the area of software development to gradually add new software features and applications to its iPhone and Apple TV products free of charge, providing its customers with the "greatest possible experience."

"We are taking this bold step to leverage what we do best," chief financial officer Peter Oppenheimer said during a conference call with analysts and members of the media. He added that some of the new iPhone applications will be "entirely new applications."

Oppenheimer offered few additional details on the two-pronged initiative, but implied that the new features and applications would be made available through automatic software updates to both iPhone and Apple TV.

In order to account for the new features, Apple said it will document iPhone and Apple TV income through a subscription based accounting model, in which income will be distributed over a 24-month period. Payments from AT&T/Cingular will be reported on a quarterly basis.

During the call, executives for the Cupertino-based company also revealed that Apple retail store personnel are "putting a lot of energy into preparing for the launch" of iPhone and how to best market the revolutionary device to customers.

Although Apple has yet to begin taking iPhone orders through retail or its online store, it said to expect an announcement at a later date.

The company remains on track to introduce the device in Europe during the fourth calendar quarter (Oct. - Dec.) and Asia in 2008. In the United States, iPhones will be sold via Apple.com, Cingular.com, Apple retail stores, and Cingular/AT&T retail stores. They will not be sold through Cingular/AT&T partner stores such as Best Buy.

Apple chief operating officer Tim Cook would not comment on initial iPhone supply, explaining that the company had not yet begun manufacturing ramp of the device.

"It's very difficult to tell what demand is until you're shipping the product," he said.