Apple unveiled two new iPhones in its bid to expand its share of the smartphone market.
"The business has become so large that this year we are going to replace the iPhone 5 and we are going to replace it with two new designs," Apple chief Tim Cook announced on Tuesday at the company's Silicon Valley headquarters.
Apple will begin taking orders on Friday, and on September 20 the two devices will go on sale in Australia, the United States, Britain, China, France, Germany, Japan and Singapore.
The iPhone 5C is part of Apple's bid to counter the flood of low-cost smartphones from rivals, most of which use the Google Android operating system.
Apple designer Jony Ive said that despite the low cost, the polycarbonate iPhone 5C with a steel frame "is beautiful."
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"We took the same fanatical care with how the iPhone 5C feels in your hand," Ive said.
The iPhone 5C with 16 gigabytes of memory will sell in the US for as low as $US99 ($A108) with a US carrier contract - half the cost of earlier iPhone base models.
Analysts were keenly focused on the promise of an iPhone 5C to win over buyers in China and other developing markets where there is fierce competition from low-priced smartphones powered by Android.
The top-line iPhone 5S, which starts at $US199 with a contract, "is the most forward thinking phone we have ever created," said Apple vice president Phil Schiller.
"It is the gold standard in smartphones."
The 5S will also have improved battery life, with some 10 hours of talk time, or 40 hours of music listening, Schiller added.
Apple also introduced a fingerprint sensor for the iPhone 5S, as a new security measure in place of passwords.
"You can just press the home button to unlock your phone," Schiller said. "You can use it to authenticate iTunes purchases."
Apple also broadened its colour palette, announcing the low-cost phone in blue, white, pink, yellow and green, and the top-line model in silver, gold and a new "space grey."
Apple also said its iOS 7 software will debut September 18. It includes a free iTunes Radio Service featuring more than 200 stations "and an incredible catalogue of music from the iTunes Store," Apple announced earlier this year.
The two new handsets keep the four-inch screen of current iPhones, despite some speculation Apple would boost the size to compete with larger phones from rivals like Samsung.
The smartphone market is now dominated by Android devices, with roughly three-fourths of all handsets, but a forecast by research firm IDC suggested Apple will increase its share this year to 17.9 per cent from 16.9 per cent.
