Smartphone pioneer Apple takes cue from competitors on new iPhones

The new Apple iPhone 5s which is available in gold, silver and gray. Courtesy Apple

Apple, the company that pioneered the era of mobile touch-based computing with the iPhone's 2007 debut, is taking more cues from the competition.

In a break with the past, when the company introduced one iPhone a year, Apple on Tuesday unveiled two new models. The iPhone 5C will cost US$99 to $199 with a wireless contract and comes in five different colors. A high-end iPhone 5S with fingerprint-security features, a speedier processor and better camera will cost $199 to $399 and be available in three colors.

The devices underscores the new normal in the $280 billion smartphone industry, as the novelty of internet-connected handsets wears out and the gadgets share many of the same basic features. Facing increasing competition from rivals such as Samsung that offer mobile phones in different styles and prices, Apple chief executive Tim Cook is following suit and expanding his company's own lineup.

"We've gotten through the first phase of the industry," said Benedict Evans, a mobile-phone industry analyst at Enders Analysis. "The original vision has been built out. We're now in a market where Apple is fighting on more equal terms."

Apple's strategy shift includes what is essentially a repackaging of last year's iPhone 5 in a new polycarbonate casing that comes in blue, pink, green, yellow and white to become the iPhone 5C. The company is not pricing the 5C as cheaply as competitors' handsets, with the phone costing $549 and up without a two-year contract, according to Apple's US website, showing it is unwilling to trade its industry-leading profit margins for increased market share.

"Nobody expected it to be this high," said Brian Blair, an analyst at Wedge Partners who attended the Apple event. "They are clearly saying we aren't willing to go downstream."

Even so, Apple is boosting its pool of potential customers. Apple said it was adding Japan's largest carrier, NTT DoCoMo, and that it would have devices immediately available in China for the first time.

Apple is offering its newest iPhones through China’s smaller wireless carriers and has yet to announce a deal with China Mobile, which has a customer base more than twice the size of the US population.

The 5S and 5C models are being released for the networks of China Unicom (Hong Kong) and China Telecom starting this month, Apple said on its China website. China Unicom, the second-largest domestic carrier, and number three 3 China Telecom already sell Apple handsets, with both operators dwarfed by China Mobile.

The agreements will make Apple’s new smartphones available to about 37 per cent of China’s 1.2 billion wireless subscribers as it competes with domestic rivals including Lenovo and Xiaomi. The 5C will start at 4,488 yuan ($733) and compete with handsets sold for as little as $100 that helped erode Apple’s market share to 5 per cent in the second quarter from about 9 per cent a year earlier.

* Bloomberg News