People arrive for an Apple product announcement at the Apple campus in Cupertino, Calif.
(Photo: Justin Sullivan, Getty Images)
Hoping to take another big bite out of the smartphone market, Apple on Tuesday unveiled its next-generation iPhone 5S, a new iPhone 5C in several colors starting at $99 and the latest version of its new iOS 7 operating system.
Apple marketing chief Phil Schiller showed green, white, blue, pink, and yellow iPhone 5C models at its Cupertino headquarters. The new phone casings are made of a polycarbonate translucent plastic.
The new 5C will cost $99 for a 16GB version and $199 for a 32GB model with a wireless service contract. It will be powered by Apple's A6 processor and sport an upgraded 8 megapixel camera. The 5C gets Apple's 4-inch retina display and can run on 4G LTE networks.
Apple's dual phone attack will allow it to "serve even more customers," said Schiller on stage.
But the colorful iPhone 5C addition to its lineup will run $549 for a model purchased without a carrier plan, a price some may see as relatively high, points out Gartner analyst Van Baker.
Shares of Apple fell 2.8% at $492.04 in midday trading on the news.
"The reason why the stock is down is the price is a little more than was hoped for," says Baker.
Apple's Schiller also took the wraps off the iPhone 5S, calling it the new "gold standard" in phones. Apple's latest will be a 64-bit model powered by a new A7 chip and come in a new a gold option in addition to black and silver. Apple's marketing chief says the processor is twice as fast as its predecessor.
Apple also included a much-expected fingerprint ID sensor in its home button, allowing people to unlock the phone as well as make iTunes purchases.
"The 5S is a really nice phone. They seem really confident that the fingerprint technology will work. If they can do that and have it work effectively, it is a really nice improvement to the pass code," says Baker.
IPhone 5S prices will run $199 for a 16GB model, $299 for a 32GB and $399 for a 64GB one - all requiring a two-year contract.
Both phone models - 5S and 5C - will be available for preorder on September 13 for delivery by September 20.
Also new: iPhone 5S has a motion chip, called M7, which will send data from sensors to apps, which could mark its first step to wearable computing. The new M7 chip can sense if its user is walking, running, driving or stationary. Such capabilities pave the way for new health and fitness apps.
Camera advances come to the iPhone 5S as well. The 8-megapixels stays the same but the unit will feature a larger sensor capable of better results in low light. The A7 chip will deliver faster auto focus and picture capture as well as provide image and video stabilization.
"I think the 5S will do extremely well. The question mark is how well the 5C will do and sell at that price point," says Baker.
This fall is shaping up as a crucial season for smartphone makers. Apple is up against top Android phones from Samsung, HTC, Sony and LG, not to mention the new Moto X from Google's Motorola unit and Nokia's Lumia 1020 Windows Phone.
Phones in distinctive colors and styles are a big part of the competitive push this year. Moto X buyers on AT&T now can customize the look of the handset via the Moto Maker feature, and HTC just rolled out a metallic blue HTC One that is available exclusively at Best Buy.
Apple will reach its 700 millionth shipment of iOS by next month. Google recently passed 1 billion Android activations.
With its one-time iron-clad grip on the the smartphone market under pressure, Apple is banking on a new hit. Its market share fell again in the second quarter - to 14.2%, from 18.8% the year before, according to a recent report from research Gartner.
Apple sold more phones in the quarter - 31.9 million, up from 28.9 million a year ago - but there's a huge gap between Apple and No. 1 ranked Samsung, which sold 71.4 million smartphones, up from 45.6 million.
Apple also took the final wraps off its latest version of iOS 7, to be released Sept. 18. The new operating system takes a stripped-down approach to the look and feel of the software. The new iOS 7 gives recommendations for commute planning much in the way Google Now does.
Also, iWorks will become a free app available on new iOS devices, offering creation of documents, spreadsheets and presentations.
Siri now comes in male and female voice options. The voice assistant has added new features such as the ability to return Tweets among queries.