Apple Announces iPhone 5

The iPhone 5 is the year's most eagerly awaited phone launch, and analysts expect Apple Inc. to sell tens of millions of units before the year is out.

The phone will cost the same as the iPhone 4S did when it debuted, starting at $199 with a two-year contract in the U.S. Meanwhile, the price for the iPhone 4S will drop to $99 for new contract signers, and the iPhone 4 will be free.

The iPhone 5 will come with the capability to connect to the fastest new wireless data networks, both in the U.S. and overseas. That's another feature that was widely expected. Some competing phones in the U.S. have had this ability for a year and an half.

The bigger screen moves Apple somewhat closer to competing smartphones, but the iPhone is still small compared to its main rivals. Samsung Electronics Co., Apple's biggest competitor, has increased the screen size of its flagship phone line every year, and it's now 4.8 inches on the diagonal, about 45 percent larger than the one on the new iPhone. The new iPhone is lighter than Samsung's new Galaxy S III.

With the new model, Apple is ditching the connection port it's used for iPods, iPhones and iPads for nearly a decade in favor of a smaller, narrower one. That means Apple is still the holdout in an industry where other manufacturers have settled on a standard connector for charging and computer backups.

There will be adapters available so that the new phone will be able to connect to sound docks and other accessories designed for the old phones.

Thanks to new technology that eliminates a separate touch-sensing layer in the screen, the phone is 18 percent thinner and 20 percent lighter, said Apple marketing head Phil Schiller. He spoke at an Apple event in San Francisco.

The camera on the back of the iPhone 5 has the same resolution as the one on the iPhone 4S, but takes pictures faster and works better in low light, Apple said.

The front-facing camera is getting an upgrade to high-definition, letting users take advantage of the faster data networks for videoconferencing.

The iPhone 5 will arrive with a new version of Apple's operating system, iOS. It will be available for download to older phones on Sept. 19.

One feature missing from the new phone is a chip for near-field communications, or NFC. Other top-of-the-line phones are incorporating such chips, which let phones work as credit cards at some store payment terminals. They also enable phones to share data when "bumped" into each other.

Apple also announced a new iPod Touch model that brings over the changes applied to the iPhone 5, including the bigger screen and smaller connection port. For the first time, Apple's voice-controlled personal assistant software, Siri, will be available on the iPod.

Apple is also updating its iTunes software for the Mac and PC, with what is says is a "dramatically simpler and cleaner interface." It will be available as a free download in October.

In another audio-related update, the white earbuds that ship with all of Apple's portable devices are getting an update. Now called "earpods," they're tube-shaped, which Apple says will help meld them to the shape of your ear. The earpods took three years to design, Apple said. They'll go on sale Wednesday as a stand-alone accessory, but will be included free with new devices out in October.

Apple's main announcements were largely in line with investor expectations, and their response was tepid. Apple shares fell $1.64, or 0.3 percent, to $658.95 in afternoon trading.

The shares have been on a tear as expectations rose for the iPhone 5, rallying 16 percent since Apple's latest earnings report, in July.

Update: Apple has put up its iPhone 5 page. "The biggest thing to happen to iPhone since iPhone" is the tagline.

Update 2: We talked to tech analyst/consultant/columnist Tim Bajarin, who has been checking the phone out. Here's what he has to say about it:

The iPhone 5 is the best-engineered smartphone I've ever seen. When you touch it, it feels like a piece of jewelry. Apple has actually completely rearchitected components. Faster processor yet smaller. The 4-inch screen makes a huge difference from the standpoint of more surface space.

This will sell in huge quantities because there are a lot of people who have not upgraded yet and their contracts are up, so there will be pent-up demand there. And then there will be consistent demand by individuals drawn to the new industrial design.

At the engineering level, it's by far superior to anything I've seen in the Android or Windows 8 camp. From that standpoint, there will be more people looking at this as the best-designed smartphone. So competitors will be playing catch-up.

It's a much better designed phone than the last time.

Live blogs of today's announcement:

Apple Announces iPhone 5

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