Apple launches iPhone 5S and $99 iPhone 5C with five colors

The iPhone 5S, which starts at $199, includes the much-expected fingerprint sensor. The iPhone 5C, with retina display, will retail for $99 for 16GB with a two-year contract or $199 for the 32GB version.

Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Shara Tibken
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Phil Schiller, Apple's head of marketing, unveils the iPhone 5C. Josh Lowensohn/CNET

Apple on Tuesday unveiled its new flagship iPhone 5S and a new budget smartphone, the iPhone 5C, as it seeks to attract more customers and revitalize interest in its devices.

The iPhone 5S includes updated components, comes in three colors, and includes a fingerprint sensor to unlock the device and make purchases. It will retail for $199 for 16GB, $299 for 32GB, or $399 for 64GB, all with a contract. The iPhone 5C, which is made of plastic, starts at $99 for the 16GB version or $199 for 32GB with a two-year contact.

Preorders start Friday. The devices will be available in stores on September 20.

"The iPhone 5C is made with all the incredible technology that customers have loved with the iPhone 5, but there's more, too," Phil Schiller said during the event. "It has an incredible new design -- one that's more fun, and more colorful than anything we've made before."

The budget device has a polycarbonate wrap-around back. It will come in five colors -- green, white, blue, red, and yellow. The screen wallpaper will match the exterior of the phone. For the new iPhone 5C, Apple also designed $29 custom cases made of silicon with a microfiber lining.

The iPhone 5C will sport a 4-inch retina display, like the iPhone 5, as well as an A6 chip inside with "blazing-fast performance." The battery is larger than in the iPhone 5, and it includes an 8MP iSight camera, with the five-element lens and IR filter as seen on the 5.

Meanwhile, Apple also unveiled its latest flagship device, the iPhone 5S, which it called "the most forward-thinking phone anyone has ever made." It's made of high-grade aluminum and comes in silver, gold, and "a new space gray."

The device also sports a new A7 processor. The A7 chip includes 64-bit capabilities, which makes it on par with PC chips. The iPhone 5S is "up to twice as fast" as the previous-generation system and has twice the graphics performance as well.

Apple also incorporated a chip that it calls the M7. This is a "motion co-processor" that aggregates and monitors accelerometer, gyroscope, and compass data and offloads it from the A7. That enables a new generation of health and fitness apps, such as a new Nike+ Move app. The app keeps track of what users do, tracks their Fuel points, and lets them compete with friends.

Watch this: Apple's iPhone 5S arrives in gold
Battery life is on par with the iPhone 5. The 5S has 10 hours of 3G talk time, 10 hours of browsing over LTE cellular networks or Wi-Fi, 40 hours of music playing, and 250 hours of standby.

The device also includes a new Apple-designed camera lens with a larger aperture and sensor. When a user takes a picture, it actually takes multiple shots and chooses the sharpest. There's also a "true-tone flash" that analyzes and presents the proper-color flash, as well as other shooting modes.

In addition, the device includes the much-expected fingerprint sensor, dubbed Touch ID. It's built right into the home button. It's still a physical button that a user needs to push down, but there's a metal ring that senses the person's finger. It can be used to unlock the phone or purchase items from iTunes.

The iPhone 5 is going away, but the iPhone 4S will now be available for free with a two-year contract.

The launch comes as the Cupertino, Calif., company faces heightened competition. Apple has been losing market share to rivals, such as Samsung, with its position in the most recent quarter falling to its lowest level in three years. As growth in the high-end smartphone market slows, Apple must find ways to attract new buyers, as well as expand into lower-priced phones.

The iPhone 5C also represents Apple's chance to broaden its market. While its smartphones are popular around the world, the majority of people in places like China can't afford $800 phones. The company plans to host an event in China later this week, where it is believed that Apple will announce a partnership with China Mobile, the world's biggest carrier.

Apple unveils iPhone 5S, iPhone 5C (pictures)

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Updated at 10:30 a.m. PT and again at 10:40 a.m. and 11:10 a.m. with additional details.