Facing ferocious competition in the global smartphone market, Apple Inc. on Tuesday unveiled a less-expensive version of its popular iPhone.
The colorful, plastic-sheathed iPhone 5c could appeal to lower-income Americans, as well as millions in the developing world who are beginning to replace their low-end cellphones with more sophisticated handsets.
“They don’t feel like a cheaper phone. They feel like an iPhone,” Carl Howe, a vice president at the Yankee Group, a Boston tech research firm, who was at the Apple announcement in California and handled the new, lower-cost phone. “It’s clearly positioned as a premium product still.”
While higher-priced iPhones feature cases made of metal and tempered glass, the iPhone 5c’s body is made of plastic. Customers can choose among five colors — blue, green, pink, yellow, or white. But beneath the skin, the phone has a steel frame. Howe said this makes the phone feel rigid and less “plasticky” than rival products such as Samsung Corp.’s Galaxy S4 smartphone.
Under the skin, the hardware of the new phone is little changed from that of the iPhone 5. The biggest difference is a higher-quality front-facing camera for sharper self-portraits. In addition, both the iPhone 5c and iPhone 5s, the upgraded high-end device, will be loaded with an upgraded version of Apple’s operating system. Called iOS 7, the software will include a redesigned user interface, improved multitasking, and a new service that will stream music via the Internet. Current Apple device owners will be able to get iOS 7 as a free download starting Sept. 18.
“I think it’s great because more people will be able to afford it. And the colors are cool,” Aiden Phipps, an 18-year-old student at the New England Conservatory , said outside the Apple store in Back Bay on Tuesday.
Another Apple fan, 47-year-old Kristen Hunt of Andover, welcomed the company’s decision to introduce a more affordable phone. “If it’s plastic and is more easily available in different markets, go for it,” Hunt said.
Moving down market is an unusual move for Apple, which has long cultivated an image of a maker of highly refined technology — at a price.
But Apple appears to have concluded that its premium pricing has been a barrier to iPhone sales, and the company has long since ceded its position atop the smartphone market to lower-price devices running Google Inc.’s Android operating system.
The research firm IDC Corp. last month said that Android phones were garnering 79 percent of worldwide smartphone sales in the second quarter of 2013, compared with 13 percent for Apple.
A lower-priced phone should also help Apple do better in a major consumer market that has resisted its charms: China. Other overseas markets that have embraced lower-priced phones also offer opportunities for Apple. For example, Microsoft Corp., whose Windows Phone software holds a distant third place in the global market, is finding some success in Europe with less expensive phones; it is approaching 10 percent of the market in Britain, France, and Germany, according to British research firm Kantar Worldpanel, compared with less than 4 percent of the worldwide market.
Apple didn’t price the 5c to match the rock-bottom prices of some rivals. For instance, some Windows phones sell at about $120 without a two-year contract. The cheapest no-contract iPhone 5c will cost $549, $100 less than the full price of the 5s.
“With the 5c they’re looking to broaden their customer base, but they’re doing so with profitability in mind,” said Sarah Rotman Epps, a senior analyst for Forrester Research in Cambridge.
But most people in the United States buy phones with a service contract from a communications provider, and here Apple’s pricing becomes more competitive.
The new iPhone 5c will cost $99 with a two-year service contract for the model with 16 gigabytes of memory, or $199 for 32 gigabytes.
The iPhone 5s will be priced at $199 with 16 gigabytes of memory or $299 for 32 gigabytes. Apple will start taking preorders for the 5c on Friday, and will begin delivering them to customers on Sept. 20. The 5s goes on sale that same day.
The iPhone 5s is a substantial upgrade from its predecessor, featuring a more powerful processor chip and a second, separate processor dedicated entirely to analyzing motion data from the phone’s accelerometer, gyroscope, and compass. Apple says this will lead to more precise measurements of body motion for users who run exercise apps, while also reducing battery drain.
The camera in the new phone will have a larger image sensor with larger pixels for better low-light performance — a feature also found on the HTC One smartphone. Apple is also adding an improved flash for more natural lighting.
Perhaps the most significant addition is a fingerprint sensor that can identify the phone’s owner with a single touch. The sensor stores the user’s fingerprint data on the phone, not on Apple’s Internet servers, to better protect the user’s privacy. And it does more than unlock the phone. A user can also gain access to Apple’s online retail store simply by touching the sensor.
“I would argue that the fingerprint scanner has major implications,” said Michael Oh, president of Tech Superpowers, a Boston electronics company specializing in Apple products.
Oh said that Apple could make the feature compatible with other Internet sites. Eventually, an iPhone 5s user could log into his online banking account or a favorite online retailer merely by touching the fingerprint sensor. If the idea catches on, it could make “biometric” security systems popular with consumers.