Apple unveiled two new iPhones on Tuesday in its bid to expand its share of the smartphone market, including one as low as $99 with a US carrier contract.
"The business has become so large that this year we are going to replace the iPhone 5 and we are going to replace it with two new designs," Apple chief Tim Cook announced at the company's Silicon Valley headquarters.
Apple will begin taking orders on Friday, and on September 20 the two devices will go on sale in the United States, Australia, Britain, China, France, Germany, Japan and Singapore.
The iPhone 5C is part of Apple's bid to counter the flood of low-cost smartphones from rivals, most of which use the Google Android operating system.
The five colors of the new iPhone 5C on display after Apple Inc's media event in Cupertino, California. (Reuters Photo)
Apple designer Jony Ive said that despite the low cost, the polycarbonate iPhone 5C with a steel frame "is beautiful."
"We took the same fanatical care with how the iPhone 5C feels in your hand," Ive said.
The iPhone 5C with 16 gigabytes of memory will sell for as low as $99 with a US carrier contract -- half the cost of earlier iPhone base models.
Analysts were keenly focused on the promise of an iPhone 5C to win over buyers in China and other developing markets where there is fierce competition from low-priced smartphones powered by Android.
The exploded view of the home button which doubles as a fingerprint sensor, seen on an image of the new iPhone 5S at Apple Inc's media event. (Reuters Photo)
The top-line iPhone 5S, which starts at $199 with a contract, "is the most forward thinking phone we have ever created," said Apple vice president Phil Schiller.
Highlights: Apple opens goody bag, unveils two new iPhone models starting at $99
"It is the gold standard in smartphones."
Schiller said the 5S model includes a speedier chip which brings up the computing power from 32 to 64 bits.
"It has over a billion transistors in it," he said, adding that the device will be "about twice as fast in graphics and computing power and about 40 times faster than the original iPhone."
Phil Schiller talks about the new iPhone 5S camera at Apple Inc's media event in Cupertino, California. (Reuters Photo)
The 5S will also have improved battery life, with some 10 hours of talk time, or 40 hours of music listening, Schiller added.
Apple also introduced a fingerprint sensor for the iPhone 5S, as a new security measure in place of passwords.
"You can just press the home button to unlock your phone," Schiller said. "You can use it to authenticate iTunes purchases."
Schiller added: "We have so much of our personal data on these devices, and they are with us almost everyplace we go, so we have to protect them."
Apple CEO Tim Cook speaks on stage before the new product introduction in Cupertino, California. (AP Photo)
Apple also broadened its color palette, announcing the low-cost phone in blue, white, pink, yellow and green, and the top-line model in silver, gold and a new "space gray."
Apple also said its iOS 7 software will debut September 18. It includes a free iTunes Radio Service featuring more than 200 stations "and an incredible catalog of music from the iTunes Store," Apple announced earlier this year.
The two new handsets keep the four-inch screen of current iPhones, despite some speculation Apple would boost the size to compete with larger phones from rivals like Samsung.
Apple announced separately a deal with Japan's biggest mobile phone carrier NTT DoCoMo to bring the two new iPhones to that country.
"NTT DoCoMo has built an impressive network, the largest in the nation with over 60 million customers," said Cook.
Screenshots of the iOS7 seen on screen during Apple Inc's media event in Cupertino, California. (Reuters Photo)
"We've enjoyed tremendous success with iPhone in Japan, in fact it's the top selling smartphone in the country, and we look forward to delivering iPhone into even more customers' hands through NTT DoCoMo."
The smartphone market is now dominated by Android devices, with roughly three-fourths of all handsets, but a forecast by research firm IDC suggested Apple will increase its share this year to 17.9 percent from 16.9 percent.
Cantor Fitzgerald analyst Brian White said the new low-cost device will help Apple broaden its appeal.
"Since Apple's iPhone family focuses on the higher-end part of the smartphone market, we estimate the company has been unable to address approximately 60 percent of the smartphone market," he said in a note to clients.
"We believe today's event will prove to be part of a larger string of events over the next year as Apple enters a year of innovation."