Cupertino - Apple took the wraps off a new iPhone on Tuesday but may have left some fans wishing for more than an updated incarnation of last year's smartphone, as rival Google closes in.
Newly minted CEO Tim Cook helmed his first major product launch with aplomb. The operations and supply-chain expert, not known for pitching products, stood in for ailing co-founder Steve Jobs, who had not shown up as some expected.
The new iPhone is faster, souped-up and comes with voice recognition and a better camera as expected, but did little to lift the bar for smartphone capabilities. Investors, who had approached the event with high expectations, sent the shares down as much as three percent.
The latest iPhone come at a critical juncture as Android phones by Samsung Electronics and other competitors close in on Apple's lead. Android phones dominate the US market three years after Google introduced the software.
Cook, who said Apple controls five percent of the global smartphone market, is expected to introduce the latest iPhone later on Tuesday. Wall Street and industry insiders will scrutinise his performance to see if he can carry off a high-profile Apple launch.
Some shareholders and analysts expect a cameo appearance by Jobs, now chairman. The pancreatic cancer survivor, who handed the reins to Cook in August after taking his third medical leave, has not yet appeared.
The new iPhone, expected to be faster, thinner and equipped with a larger screen, is likely to come loaded with the updated iOS5 software that Apple unveiled in June. Some of the new features include improved notification functions and better Twitter integration.
The iPhone, which accounts for more than 40 percent of Apple's sales, has been a big success since it came out in 2007, making Apple into one of the world's leading consumer electronics companies.
The company also claims inroads into a corporate market dominated by Research in Motion. It said more than 90 percent of Fortune 500 companies are testing or using its iPhones and iPads.
RIM shares trading on the Nasdaq stock market were down nearly 3 percent. Apple's shares fell about 1 percent to $371.32, while Google shares fell 1.4 percent.
The iPhone event took place this year at Apple Central - at the same venue where the iPod first was introduced years ago - versus the larger, splashier venues of more recent choice such as downtown San Francisco's Moscone centre.
The restricted attendance may have triggered a surge in online viewership, which slowed or crashed live blogs run by websites such as Engadget, Wired and Gizmodo.
Interest is high with Google emerging as a formidable competitor after three years of rapid market expansion.
Apple would be launching the latest version of its iPhone at a time when the economy is slowing and competition is intensifying. More than 550 000 Android-based devices - including tablets - are activated each day.
Apple faces the challenge of sustaining the popularity of its iPhone 4, more than a year old. Apple sold more than 20 million units in the third quarter, which ended June 25.
Nielsen data shows the iPhone was No. 2 in the United States with a 28 percent market share, with Android at 43 percent.
Globally, iPhone shipments climbed 9.1 percent in the second quarter while Nokia's plummeted more than 30 percent, handing the top spot to Apple with a market share of 18.4 percent, according to IHS iSuppli.
But Samsung, whose shipments grew even faster, is coming on strong with a global market share of 17.8 percent.
Some on Wall Street also expect Apple to unveil later on Tuesday a cheaper phone for the fast-growing Asian market, one of the areas where Apple can accelerate its growth. - Reuters