Apple unveils iPhones at lower price to combat rivals

Source: Bloomberg Source: Bloomberg

Apple Inc. (NASDAQ:AAPL) unveiled two new iPhones, including a cheaper $99 version in bright colors and an updated high-end device, in a strategy shift by Chief Executive Officer Tim Cook to reach a broader range of customers around the world.

A new iPhone known as the 5C will start at $99 with a two-year contract and will come in five colors, Apple said today at an event at its headquarters in Cupertino, California. The high-end model called the iPhone 5S, which will be available in three colors including gold, will cost $199 to $399 with a two-year contract. The phones will go on preorder on Sept. 13 and be in stores starting Sept. 20.

“The business has become so large,” Cook said. “We’re going to replace it with not one, but two new designs.”

The product introductions underline how Apple, which was a trailblazer when it debuted the iPhone in 2007, is increasingly following the strategy of other smartphone makers that offer handsets in different colors and prices. Until now, Apple only released one new iPhone model every year. As competing devices running Google Inc.’s Android software gain in popularity in the $280 billion smartphone market, Apple is expanding its iPhone lineup to reach more customers.

“The competition has caught up and it’s now purely about how quickly it can innovate and drive its own experience forward,” said Benedict Evans, an analyst with Enders Analysis in London.

Multiple Colors

Apple also said it was adding Japan’s largest carrier, NTT DoCoMo Inc., and that it would have devices available upon introduction in China for the first time. The company is near a deal with China Mobile Ltd., the world’s largest carrier, people familiar with the plans have said.

Each iPhone unveiling is critical for Apple because the handset accounts for about half its revenue. Rivals including Samsung Electronics Co. using Android software have taken market share by offering more handsets in varying styles and prices. IPhone sales trailed the overall smartphone market’s growth in the last two quarters.

Apple is responding with the new iPhones, which made their debut in front of a crowd that included Apple board member and former Vice President Al Gore and Twitter Inc. co-founder Jack Dorsey. Elvis Costello also played toward the end of the event.

The iPhone 5C, which has a plastic casing and a 4-inch screen, will come in blue, green, pink, yellow and white. The iPhone 5S will come in white, black and gold and has a 64-bit chip that the company said will make it work twice as fast as the iPhone 5. It will also have Touch ID fingerprint-sensor technology that is located on the phone’s Home button, which people can use to unlock their phone and confirm purchases from iTunes and Apple’s app store.

Mobile Software

Apple also revamped its mobile software with the introduction of iOS 7, which will be available for free starting Sept. 18. The overhaul includes new sounds, picture-sharing features, and an iTunes radio feature.

At the event, the company said 700 million iOS devices would be sold by next month. Apple added that its Siri digital assistant is “massively improved” and now draws information from Twitter and Wikipedia, among other things.

More new Apple products are expected this year in the run- up to the holiday shopping season. The company is expected to introduce new iPads later this year, people familiar with the plans have said.

Apple shares fell 1.6% to $497.80 at 2:27 p.m. in New York today.

www.bloomberg.com

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Comments
comments powered by Disqus