By Scott Hillis

SAN FRANCISCO (Reuters) - Apple Inc on Monday unveiled a next-generation iPhone with faster Internet access that will run on advanced wireless networks and sell for as low as $199 -- half the current entry-level price.

Shares of Apple, after strong recent gains partly driven by anticipation of the new iPhone, fell 2.2 percent after Chief Executive Steve Jobs confirmed the new iPhone' s release.

Shares of Palm Inc, maker of the Treo, a rival high-end smart-phone, fell 4 percent.

Improved e-mail features for the iPhone are intended to woo business people, while its ability to run on faster networks is key to Apple' s push to gain market share in Europe and Asia.

" It' s amazingly zippy," Jobs said, showing off the encore to a device that melds a mobile phone, iPod media player and Web browser. The new iPhone, available in black and white, loads Internet pages about 2.8 times faster than the original, he said.

Analysts said it would change the stakes in the mobile market given its price, business-oriented services, and speed.

" It changes the game for all smart-phone makers," said Tim Bajarin, head of Creative Strategies, referring to the price.

An entry-level version of the new iPhone, with 8 gigabytes of memory, will cost $199, versus $399 for an older-generation iPhone with similar memory. A version of the new iPhone with twice the memory will cost $299. Both will go on sale in 22 countries on July 11.