Apple goes big screen with iPhone 5

Posted at 09/13/2012 8:08 AM | Updated as of 09/13/2012 2:29 PM

SAN FRANCISCO, California - Apple on Wednesday introduced a new iPhone 5 with a bigger screen and slimmer body that analysts quickly branded a sure hit for the culture-changing tech giant.

Apple chief executive Tim Cook called the launch "the biggest thing to happen to iPhone since the iPhone."

The California company called the iPhone 5 "the thinnest smartphone in the world," with an anodized aluminum body that is 18% thinner and 20% lighter than iPhone 4S.

The new iPhone has a rich four-inch (10-centimeter) display prime for the red-hot smartphone market, in which screen size is one of the key factors important to buyers, according to Nielsen senior vice president Jeff Wender.

At a packed launch event in San Francisco, Apple marketing chief Phil Schiller praised the new iPhone as "an absolute jewel."

Apple will start taking orders for the phone Friday and begin shipments on September 21 in the US, Canada, Britain, France, Germany, Australia, Hong Kong, Singapore and Japan, and the phone will be available in 100 countries by the end of the year.

Pricing for US customers will start at $199 with a two-year telecom service contract.

The introduction has been among the most keenly anticipated in the tech world, with rumors and leaks over several months about the new device.

Schiller said the taller iPhone nestles in one's palm to naturally align with thumbs and works on the faster mobile Internet networks known as LTE.

"When you carry your phone it should fit beautifully in your hand, that is just how we designed iPhone 5," he said.

"Everything you do looks gorgeous on this beautiful widescreen display," he said, describing the so-called Retina high-definition display.

The new device features Apple's own new A6 processor, which according to Schiller doubles the speed for loading Web graphics.

"The primary purchase drivers for smartphones are price, features, operating system, apps and screen size," Wender said during an iPhone 5 hands-on session during the event. "Apple addressed all those key drivers today in spades."

Battery life, a key complaint of smartphone users, is extended to eight hours with mobile phone and browsing and 10 hours if Wi-Fi connections are used.

Apple has also installed its own mapping software, upgraded its voice-activated assistant known as Siri and incorporated Facebook in the iOS software.

Analysts expect Apple to sell tens of millions of the new iPhones in the coming months, luring in smartphone buyers who have been waiting to upgrade.

Morgan Stanley analyst Katy Huberty said it is possible Apple may ship between 48 million and 53 million iPhones in the fourth quarter and "up to 266 million" in 2013.

She said the company could sell eight to 10 million in the opening days it becomes available.

But NPD analyst Stephen Baker said the key US market has "very different dynamics" than for previous iPhone launches and that means Apple may not have the same impact.

"The US smartphone market appears to be an increasingly mature one," he said.

Because Apple has already captured a large chunk of the market, Baker said it would be "more difficult for Apple to easily take share from weakened competitors, because many of the easy share gains have already been accomplished."

Apple has fierce customer loyalty and has been rapidly gaining users, but has failed to keep pace with smartphones powered by Google's Android operating system.

Research firm IDC said Apple had 16.9% of the global smartphone market, with 68% of the market held by makers of Android phones, led by Samsung.

"I think we will see some reaction that Apple didn't do enough and that some of the features are just catch-up," Forrester analyst Charles Golvin said after the event.

"But, when you look at the way the whole package is put together in a beautiful, thin, light device you'll see that Apple has taken another step."

An iPhone change with the potential to irk fans is a new "Lightning" connector to replace 30-pin connections, the piece that connects devices to computers, power outlets or docking stations.

Apple will sell adaptors for plugging the new generation iPhone and iPod touch devices into accessories they may already own such as stereo speakers or car sound systems.

Apple shares, which hit record highs this week and extended the company's position as the world's most valuable firm, rose 1.39% to $669.79 on the news. Shares inched up to $671.15 in after-hours trades on the Nasdaq.

Ben Reitzes at Barclays said much of the news was already known "but we believe that this launch will be very successful... We believe today's announcement marks the beginning of a distinctive holiday season for Apple that blends today's iPhone launch with the iPad mini launch."

Apple is widely expected to launch a smaller version of its market-leading iPad tablet computer later this year.

Wednesday's launch event also unveiled a new lineup of music players including the iPod touch, essentially an iPhone without mobile connections, and the iPod nano.

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