Apple unveils new versions of iPhone


CUPERTINO, Calif. – Apple Inc. lifted the wraps on two new iPhones on Tuesday, adding the iPhone 5S to its high-end lineup and introducing a new, less-expensive design called the iPhone 5C. Apple made the announcements at an event at its headquarters in Cupertino, Calif.  The company is hosting other events in Europe and China to tout the iPhone’s expanded lineup, which now includes the company’s first attempt to design a device specifically for lower-cost market segments. In an unusual move, Apple essentially killed the iPhone 5, which was introduced last year. To replace the device, it is targeting the iPhone 5C for lower-end customers and the iPhone 5S – which comes with fingerprint-scanning technology and a 64-bit processor – for the higher end.  “In the past, when we’ve announced a new iPhone, we’ve lowered the price of older iPhones. We’re not going to do that. This year, we are going to replace the iPhone 5,” Apple Chief Executive Tim Cook told the crowd at the Apple event.  After the event, Apple’s stock fell 2.3 percent, to close at $494.64. The company’s shares had jumped in the past two months, but are down 7 percent for the year-to-date.  “We expect choppy trading for Apple after the launch date,” Peter Misek of Jefferies & Co wrote in a report to clients. He noted that the contract price on the iPhone 5C came in higher than expected, and believes challenges with the fingerprint technology may limit production levels of the iPhone 5S.  “While the iPhone 5S fingerprint scanner provides some differentiation, we think its low yields could be a head wind to margins and initial unit volumes,” wrote Misek, who has a hold rating on the stock.  Brian Marshall of ISI Group was more bullish on Apple, saying the iPhone 5C “has the potential” to return the company to earnings growth.  “Apple needs to attack the mass-market segment of the industry where the majority of the unit opportunities now exist, in our view,” he wrote in a brief note.  The iPhone 5C is aimed primarily at emerging countries and markets like China, where Apple has lacked an entry-level smartphone that can compete with similar offerings from rivals like Samsung. Apple had less than a 7 percent share of smartphone sales in China during the first half of 2013, according to data from IDC.  The iPhones will go on sale on Sept. 20, and pre-orders for the iPhone 5C will be taken starting on Sept. 13. The 5C will cost $99 for a 16-gigabyte model, and a 32 GB device will cost $199. Taking a cue from the iMac of more than a decade ago, the 5C will come in multiple color options: blue, white, pink, yellow and green. Apple marketing chief Phil Schiller called the iPhone 5S “the gold standard” for smartphones, noting that in addition to coming in gold color, it will also be available in silver and black. “(It’s) the most forward-thinking phone we’ve ever created,” Schiller said. The 5S will come in three models: a 16 GB version for $199, a 32 GB model for $299, and a 64 GB device that will cost $399. All the prices for both the 5C and 5S include a two-year wireless carrier contract.  One of the standout features of the iPhone 5S is Touch ID, a fingerprint-reading sensor embedded into the device’s home button. The technology will let the phone’s user unlock the phone and make purchases in the iTunes store. The company also said it would launch its new iOS 7 operating system Sept. 18. The update will be available for the iPhone 4, 4S and 5; iPad 2; iPad with retina display; and iPad Mini. IOS 7 will also work with the fifth-generation iPod Touch.  Francisco Jeronimo, a mobile-device analyst with IDC, said in a research note that in addition to retaining its current base of customers, Apple needs the new products to succeed in order to “attract the second wave of smartphone adopters in developed markets, who are reluctant to adopt a smartphone,” as well as address the opportunity that emerging markets represent. “They will become the biggest smartphone markets in the world, but (are markets) where price is a major barrier to smartphone adoption,” Jeronimo said.