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Apple Inc.
introduced a pair of new flagship iPhone, the 5S, includes a faster processor and a new
fingerprint scanner, but retains the same basic form as previous models.
In a first, Apple added a second model to its lineup called the
5C—priced at $99 with a service contract—that repackages much of the
technology in its previous-generation iPhone 5 in a new colorful
polycarbonate case. Both phones, and some of the company's older
devices, will get a free version of Apple's redesigned iOS software.
Apple's latest smartphone lineup, which contained few surprises, did little to directly match some of the factors that have fueled the global rise of Samsung and a bevy of handset makers using Google Inc.'s cheaper devices and larger sizes. If Apple falls behind, it risks losing its status as a global trendsetter and ability to command higher prices.
As the world-wide market for smartphones has increased, Apple has lost market share, particularly outside the U.S. and among first-time smartphone buyers. Once the world's top smartphone maker by unit shipments, the iPhone's sales now account for 19% of the market, while Samsung represents nearly 32%, according to Gartner research. World-wide smartphone sales are expected to reach $290 billion this year, according to independent market analyst Chetan Sharma.
On the low end, competitors have been able to come in far below Apple's prices. Samsung, for example, offers smartphones in China, India and Indonesia for less than $100 without a carrier subsidy. The new iPhone 5C will cost about $733 without a carrier subsidy in China and $549 in the U.S.
On the high end, Samsung has also attracted customers with varied screen sizes and increasingly more impressive features, such as a pen to draw notes, and more advanced camera systems. Apple has been testing iPhone screens up to 6 inches, according to people familiar with the matter, but it didn't mention them at a press event Tuesday.
Executives for the Cupertino, Calif., company touted the consumer appeal of both the iPhone 5S's new hardware and software. "This is our most forward-thinking phone yet," said Phil Schiller, Apple's head of world-wide marketing.
The new features still keep Apple at the forefront of smartphone design. But they leave open the question of when, and whether, Apple can be a groundbreaker. Two years after the death of its co-founder Steve Jobs, the company has yet to come out with new product categories, or even many product surprises.
Tuesday's event put the spotlight on Tim Cook, the company's chief executive for the last two years. Some investors lost confidence in the company last year following the embarrassingly error-filled release of Apple's new mapping application to unseat Google's technology.
Mr. Cook, who
played the role of MC at Tuesday's event, positioned Apple's software as
a major advantage. The company said it would be releasing its new iOS7
software, which includes a new look and features to deter thieves and
more easily share files between devices, as a free upgrade to customers
with some older-model iPhones and iPads on Sept. 18.
App developers have said iOS 7 is one of Apple's most important software releases, and it will likely define the company's success with customers for the foreseeable future.
On stage, Mr. Schiller joked about the product leaks left few surprises. "Some of you may have seen some shots on the Web, and that is cool, because people are excited," he said.
Apple did have one software surprise up its sleeve: It is making its iWork, iPhoto and iMovie mobile productivity apps free. The move ratchets up competition with Microsoft Corp., MSFT +1.08% maker of the Surface tablets, in the lucrative business market.
The iPhone 5S—in luxury-styled gold, silver and dark gray—will include a fingerprint scanner technology called Touch ID that allows users to unlock their phones or make purchases from Apple's iTunes store by touching the home button. It costs $199 for a version with 16 GB of storage with a contract.
Mr. Schiller said the cheaper 5C model marked a product strategy shift as "the first time we're launching and rolling out two new lines of iPhones." Mr. Schiller, the keeper of Apple's high-end brand positioning, avoided calling the iPhone cheap or inexpensive, and didn't say what the "C" stood for. Apple's website offered a possible hint, saying the 5C is "for the colorful."
The iPhone 5C is effectively last year's iPhone with a larger battery and an array of new plastic casings, instead of the aluminum casings of its predecessor. The 5C will come in five colors—green, white, blue, pink and yellow—and have a 4-inch display. Its price, $99 under a two-year contract, is the same Apple typically charges for a year-old model.
Apple said it would begin taking preorders for the iPhone 5C on Sept. 13, and begin selling both it and the iPhone 5S on Sept. 20 in various countries including the U.S., the U.K. and, for a first time at launch, China.
Among the technology improvements in the iPhone 5S are Apple's new 64-bit A7 processor, which the company says has up to twice the performance of previous models.
It also features an 8-megapixel camera that can take 10 frames a second in "burst" mode, and a new chip to capture movements as customers carry the phone around to help with fitness tracking, among other uses.
Apple's shares fell 2.3% to $494.64 in regular trading on the Nasdaq Stock Market.
Brian Marshall, an analyst at ISI Group, said the iPhone 5C looked compelling, but he questioned whether Apple will be able to get the price low enough to make it attractive, while also moving the needle for Apple's closely watched gross margins, which have fallen in recent years to about 37% in its most recently reported quarter ended in June.
"The iPhone 5C is a legitimate smartphone, so the question is how low cost is it?" he said, adding he estimates the phone needs to be about $350 to entice customers.
Apple's latest smartphone lineup, which contained few surprises, did little to directly match some of the factors that have fueled the global rise of Samsung and a bevy of handset makers using Google Inc.'s cheaper devices and larger sizes. If Apple falls behind, it risks losing its status as a global trendsetter and ability to command higher prices.
As the world-wide market for smartphones has increased, Apple has lost market share, particularly outside the U.S. and among first-time smartphone buyers. Once the world's top smartphone maker by unit shipments, the iPhone's sales now account for 19% of the market, while Samsung represents nearly 32%, according to Gartner research. World-wide smartphone sales are expected to reach $290 billion this year, according to independent market analyst Chetan Sharma.
On the low end, competitors have been able to come in far below Apple's prices. Samsung, for example, offers smartphones in China, India and Indonesia for less than $100 without a carrier subsidy. The new iPhone 5C will cost about $733 without a carrier subsidy in China and $549 in the U.S.
On the high end, Samsung has also attracted customers with varied screen sizes and increasingly more impressive features, such as a pen to draw notes, and more advanced camera systems. Apple has been testing iPhone screens up to 6 inches, according to people familiar with the matter, but it didn't mention them at a press event Tuesday.
Executives for the Cupertino, Calif., company touted the consumer appeal of both the iPhone 5S's new hardware and software. "This is our most forward-thinking phone yet," said Phil Schiller, Apple's head of world-wide marketing.
The new features still keep Apple at the forefront of smartphone design. But they leave open the question of when, and whether, Apple can be a groundbreaker. Two years after the death of its co-founder Steve Jobs, the company has yet to come out with new product categories, or even many product surprises.
Tuesday's event put the spotlight on Tim Cook, the company's chief executive for the last two years. Some investors lost confidence in the company last year following the embarrassingly error-filled release of Apple's new mapping application to unseat Google's technology.
Decoding the Phone-Plan Puzzle
App developers have said iOS 7 is one of Apple's most important software releases, and it will likely define the company's success with customers for the foreseeable future.
On stage, Mr. Schiller joked about the product leaks left few surprises. "Some of you may have seen some shots on the Web, and that is cool, because people are excited," he said.
Apple did have one software surprise up its sleeve: It is making its iWork, iPhoto and iMovie mobile productivity apps free. The move ratchets up competition with Microsoft Corp., MSFT +1.08% maker of the Surface tablets, in the lucrative business market.
The iPhone 5S—in luxury-styled gold, silver and dark gray—will include a fingerprint scanner technology called Touch ID that allows users to unlock their phones or make purchases from Apple's iTunes store by touching the home button. It costs $199 for a version with 16 GB of storage with a contract.
Mr. Schiller said the cheaper 5C model marked a product strategy shift as "the first time we're launching and rolling out two new lines of iPhones." Mr. Schiller, the keeper of Apple's high-end brand positioning, avoided calling the iPhone cheap or inexpensive, and didn't say what the "C" stood for. Apple's website offered a possible hint, saying the 5C is "for the colorful."
The iPhone 5C is effectively last year's iPhone with a larger battery and an array of new plastic casings, instead of the aluminum casings of its predecessor. The 5C will come in five colors—green, white, blue, pink and yellow—and have a 4-inch display. Its price, $99 under a two-year contract, is the same Apple typically charges for a year-old model.
Apple said it would begin taking preorders for the iPhone 5C on Sept. 13, and begin selling both it and the iPhone 5S on Sept. 20 in various countries including the U.S., the U.K. and, for a first time at launch, China.
Among the technology improvements in the iPhone 5S are Apple's new 64-bit A7 processor, which the company says has up to twice the performance of previous models.
It also features an 8-megapixel camera that can take 10 frames a second in "burst" mode, and a new chip to capture movements as customers carry the phone around to help with fitness tracking, among other uses.
Apple's shares fell 2.3% to $494.64 in regular trading on the Nasdaq Stock Market.
Brian Marshall, an analyst at ISI Group, said the iPhone 5C looked compelling, but he questioned whether Apple will be able to get the price low enough to make it attractive, while also moving the needle for Apple's closely watched gross margins, which have fallen in recent years to about 37% in its most recently reported quarter ended in June.
"The iPhone 5C is a legitimate smartphone, so the question is how low cost is it?" he said, adding he estimates the phone needs to be about $350 to entice customers.
