Apple chief executive Tim Cook called the launch "the biggest thing to happen to iPhone since the iPhone."
"It is an absolute jewel. The software and engineering that went into this product is the most challenging our team has ever taken on," said Apples's Marketing Chief Phil Schiller at the packed launch ceremony of the product in San Francisco.
"It is the thinnest iPhone we have ever made, it's the world's thinnest smartphone and weighs just 112 grams," said Schiller. He added that it is 20 percent lighter than the iPhone 4S.
Apple will start taking orders for the phone from Friday onwards and will begin shipments from September 21 in the US, Canada, Britain, France, Germany, Australia and Japan. Apples's iPhone 5 will be available in 100 countries by the end of the year. Pricing for US customers will start at $199.
The introduction has been among the most keenly anticipated in the tech world, with rumors and leaks over several months about the new device from the biggest company in the sector.
Schiller said that the new, taller iPhone, made of glass and aluminum, features a new design to nestle in one's palm to naturally align with thumbs. He added that it 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 four-inch (10 centimeter) display used on other Apple devices.
The new device features Apple's own new A6 processor, which according to Schiller doubles the speed for loading web graphics.
He also said that the phone would address consumer complaints by extending battery life to eight hours use with mobile phone and browsing and 10 hours if Wi-Fi connections are used.
The iPhone 5 includes an improved camera with "new dynamic low-light mode," and "a precision lens alignment," Schiller noted.
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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 iPhone in the coming months, luring in smartphone buyers who have been waiting to upgrade their phones.
"This iPhone 5 will turn out to be Apple's biggest home run yet. This will be the biggest and most successful Apple iPhone launch so far," independent analyst Jeff Kagan said. Morgan Stanley analyst Katy Huberty said it is possible that Apple may ship between 48 million to 53 million iPhones in the fourth quarter and "up to 266 million" in 2013. She further said that the company could sell eight to 10 million in the third quarter.
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Apple has fierce customer loyalty and has been rapidly gaining users, but has lost market share to the faster-growing segment of smartphones powered by Google's Android operating system.
Smartphones powered by Android software continued to dominate the US market during the past months. However, according to comScore's report, Apple's iOS is the second most popular platform with 33.4 percent market share.
According to comScore, Samsung mobile phones remained most popular in the United States with 25.6 percent of the market. Third-place Apple gained ground to claim 16.3 percent as of the end of July.
Apple is engaged in litigation with Samsung over patent infringement and is seeking to ban US sales of some Samsung devices after a major court victory in California last month. Nicholas Carlson of the website Business Insider said the new iPhone launch represents "the most pivotal moment" for the sector.
"Companies that are, collectively, worth a trillion dollars — Samsung, Google, Amazon, Microsoft and more — have bet billions of dollars building competitors to the iPhone," said Carlson.
"Today, they find out if Apple has once again leapt way ahead of them, or if finally, the battleground is growing even," Carlson added.
Century Fox Report: Apple is Most Valuable Company
Apple shares have hit record high this week and have extended the company's position as the world's most valuable firm. They edged up 0.7 percent to $665.36 on the news. Apple is widely expected to launch a smaller version of its market-leading iPad tablet computer later this year.
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Edited By Cen Fox Post Team
