Apple drops as iPhone models reflect shift from pioneer

Changing Dynamics

The shift in iPhone strategy is a turnabout for Apple, which has long been the pacesetter in the smartphone market. After Apple co-founder Steve Jobs unveiled the iPhone in January 2007, he upended a market dominated by Nokia Oyj’s feature phones and BlackBerry Ltd.’s keyboard handsets.

As the iPhone gained in popularity to become a preeminent computing device for consumers -- catapulting Apple’s stock to make it the world’s most valuable company -- Google Inc. pushed its Android software with Samsung, HTC Corp. and other handset manufacturers who soon produced touch-screen devices.

Each iPhone unveiling is critical for Apple because the smartphone accounts for about half its revenue. Yesterday’s event was the company’s first major product debut since the iPad mini was introduced last year. Absent new gadgets, Apple’s growth has stagnated, with earnings falling last quarter.

Who’s Who

Apple is responding with the new iPhones, which debuted in front of a crowd that included Apple board member and former Vice President Al Gore, Yahoo! Inc. CEO Marissa Mayer and Twitter Inc. co-founder Jack Dorsey. Musician Elvis Costello also played toward the end of the event.

The new iPhones will hit stores on Sept. 20. 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 application store. Without a contract, the 5S costs $649 to $849, according to Apple’s online store.

The high off-contract prices indicate Apple is still betting customers will pay more for the iPhone, said Sarah Rotman Epps, an analyst at Forrester Research. “They aren’t trying to compete for the bottom of the market,” she said, adding that Apple is keeping its strategy of appealing to the “well-off masses.”

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 anticipated this year in the run-up to the holiday shopping season. The company is planning to introduce new iPads later this year, people familiar with the plans have said.

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