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Apple introduces iPhone 5S and iPhone 5C

The high-end iPhone 5S and mid-tier iPhone 5C come with Apple's new iOS 7. 

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The camera in the 5S received some major upgrades, including several automatic features designed to produce better photos. It has a larger pixels and a larger aperture, which helps capture more light. The phone also has a "true-tone" flash feature that is designed not to clash with the colors in the room or a person's skin color — something Schiller said has not been done on a phone before.

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The camera, called iSight, has "auto image stabilization," which helps avoid blurry pictures, and a slow-motion camera for video. A "burst mode" can take 10 frames per second as long as you hold your finger on the shutter, then find the best one in your camera roll.

The 5S also includes "Touch ID," which reads fingerprints at a "detailed level," Schiller said. He said it is "fun and easy" to teach the 5S about your fingerprint and once you do, you can just touch the home button to unlock the phone. The company said fingerprints will not be stored on its servers.

Tying the fingerprint scanner to payments could also open new revenue channels for Apple.

Both models will be on sale on Sept. 20 in the U.S., Australia, China, Canada, France, Germany, Japan, Singapore and U.K. Apple said this is the first time that a new phone has been available right away in China — a sign of the growing importance of that market to the company. People will be able to order the 5C in advance on Friday, but not the 5S.

For buyers entering a two-year contract with a wireless carrier, the phone will cost $199 for 16 gigabytes of memory, $299 for 32 and $399 for 64.

Apple also said its next mobile operating system, iOS 7, will be available as a free download on Sept. 18.

Craig Federighi, head of software at Apple Inc., said at an event at the company's Cupertino, Calif., headquarters that "downloading iOS 7 is like getting an all new device."

The new system can be downloaded on the iPhone 4 and later models, as well as on the tablets beginning with the iPad 2.

Apple also said that it expects to ship its 700 millionth iOS device next month. Apple CEO Tim Cook predicts that iOS 7 will become the most popular mobile operating system in the world.

Investors seemed unimpressed. Apple's stock price fell $3.17 to $503.10 during the event, which also featured Elvis Costello. The singer performed a new song from a record coming out next week.

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