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Apple reveals two new iPhone models
September 10, 2013, 9:17 pm
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Apple has unveiled two new handsets: the top-end iPhone 5S and a cheaper iPhone 5C at an event in California.
 
The 5S has a chip that continuously monitors motion, providing data for fitness apps. The 5C comes with a plastic back in a choice of colours.
 
It marks a change of strategy for Apple which has not launched two distinct types of handset at the same time before.
 
The iPhone is the firm's most important product in terms of earnings power.
 
Apple also revealed the revamped mobile operating system, iOS 7, would be available to download for use on the earlier iPhone 5 and 4S models from 18 September.
 
The new devices will include copies of Apple's word processing, spreadsheet and presentation apps which had previously cost extra.
 
The basic 5C model, with 16 gigabytes of storage, has been priced $99 (£63) with a two-year contract in the US. That is the same as network operators had charged for the ageing 4S.
 
China slowdown
Its most recent financial report said the product line accounted for $18.2bn (£11.6bn) of sales in the April-to-June quarter. That figure, which did not include downloads from its App Store, represented just over 50% of Apple's total revenue for the period.
 
However, while the number of iPhones sold was 20% up on the previous year, the company has been losing market share.
 
iPhones accounted for 13% of global smartphone shipments in the second quarter, according to research firm IDC, down from 17% for the same period a year earlier.
 
In contrast Android's share has grown from 69% to 79%.
 
Investors have been particularly concerned about Apple's performance in China.
 
At the start of 2013, chief executive Tim Cook predicted the country would eventually become Apple's biggest market.
 
But the company's latest results showed sales in China and Taiwan were 14% lower in the April-to-June quarter than the previous year. That was despite the fact it saw 12% growth for the same period in the US.
 
"The cheaper iPhone is critical for expanding the addressable market, because many people in China and elsewhere simply can't afford to buy a current generation iPhone, especially when it's not subsidised," said Jan Dawson, chief telecoms analyst at the consultancy Ovum.
 
"However, the key risk for Apple in launching a cheaper iPhone is that it may cannibalise sales of the high-end phone.
 
"That would exacerbate a problem Apple's had for the last few quarters, as average selling prices for iPhones have fallen from $608 to $581 in the past year. That in turn squeezes margins and it's only likely to get worse with a cheaper iPhone."
 
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