Apple Inc. today unveiled the latest iteration of its iPhone as well as a cheaper version of the smart phone designed for users in emerging markets that the American company hopes to wean away from lower priced handsets offered by its rivals.

Apple’s new flagship handset is called the iPhone 5S and it will run on the company’s new mobile operating system the iOS7 which will be available for free download on September 18. The new OS can be downloaded on the iPhone 4 and later models as well as tablets starting with the iPad 2.

The much-anticipated low-end model is the iPhone 5C and it will sell for as low as $99 in the United States.

“It’s more fun and colourful” than previous iPhone models, said Apple CEO Tim Cook in describing the company’s new budget-priced phone which comes in green, blue, yellow, pink and white.

The pricier 5S has the all-new A7 chip making it “the world’s first smart phone with a 64-bit desktop-class architecture,” according to Apple.

It has twice the CPU and graphics performance of previous models. The 5S supports OpenGL ES version 3.0 to deliver rich visual effects for mobile gaming.

The handset has a new M7 motion coprocessor that gathers data from the accelerometer, gyroscope and compass. This enables the development of better activity apps such as physical fitness applications that continuously measure motion data – even when the device is asleep.

The 5S comes with Touch ID, a biometric security device that recognizes the users fingerprint. Apple (NASDAQ: AAPL) said that all fingerprint information is encrypted and stored securely in the Secure Enclave inside the A7 chip of the device and never in the Apple servers or its iCloud service.

The 5C has a four-inch Retina display and is powered by Apple’s A6 chip. The phone comes with an eight megapixel camera, a rear cover that lights up. The 16GB model will sell for $99 and the 32GB model will sells for $199 in the United States with a two-year wireless contract.

There was no need to put a lot of features into the 5S, according to one analyst.

“Clearly there’s little need for gimmicks in the flagship 5S, in a launch replete with significant spec upgrades over and beyond the usual screen improvements,” said Tony Cripps, principal device analyst at analyst firm Ovum. “Apple, is certainly offering meaningful innovation here.”

He said the 64-bit architecture can claim to have brought “something new to the smart phone party” and will give the “Android fraternity something to think about.”

Cripps also noted that Apple is integrating itself to the community of of health and fitness app developers with its new sensors.

Despite introducing a cheaper handset, Apple is not truly moving down market he said.

“The day that happens is the day the company signals that it has run out of headroom for expansion,” said Cripps.”it’s far from conceding that yet as its greater interest in Japan and China show.”

Earlier this year there was much talk about Apple launching a low-cost, all-plastic iPhone handset for emerging markets.

Although the company is expected to ship its 700 millionth iOS device by October, Apple is increasingly under pressure from other phone makers such as Samsung Electronics, Sony and other Android-powered device makers offering newer smart phones at considerably lower prices.

Other smart phones are priced around $300 while the iPhone 5 is priced at $649 without a contract.

Many industry watchers have argued that capturing the Asian market is key for Apple’s survival in the mobile space.

NTT DoCoMo, Japan’s largest wireless carrier recently announced plans to offer iPhones to its customers this fall.

Apple is expected to announced a distribution deal with China Mobile Ltd. at a media event the American company is hosting in Beijing today.

 

 

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