Nearly everyone was wrong about the purpose of this phone. Most speculated that it was going to be a cheaper version for China and other markets without carrier subsidies. I as wrote last week, Apple has never chased the bottom of any market, they're bringing in a large share of the profits in mobile. It's more beneficial to Apple to increase share in the mid to high-end market. It allows them to maintain the iPhone's semi-luxury image without compromising of the features that helped build that image.
With the iPhone 5c they aren't selling a year old phone, they are releasing a "new" version of the iPhone 5 in multiple colors. It's a similar strategy used with the iPod line when they released the iPod Mini, which later became the most popular version of the iPod. It's basically an iPhone 5 in a plastic shell. It's also probably better margins manufacturing the iPhone 5c while giving more variety to consumers. Priced at $99 (on contract) I can easily see the iPhone 5c becoming the mass market iPhone this time next year.
The iPhone 5s is now positioned as the premium model, sort of like the MacBook Pro of the iPhone line. New features would be introduced at this price point and later trickle down to the $99 and Free models. The differentiating features are the camera, the new A7 processor and the fingerprint reader. The camera is better is nearly every way. Better flash, larger sensor, 120 FPS video recording for slow motion, and a multi-photo feature that allows you take 10 photos a second and chooses the best one. The processor is about twice as fast and has moved to a 64-bit architecture, the first for a mobile phone. The finger-print reader (Touch ID) is built into the home button and allows the user to scan their finger instead of using a pass code to unlock their phone and authenticate iTunes purchases. There will also be a new gold colored iPhone, the white/silver from the iPhone 5 and a new "Space Grey" that replaces the black/slate model.
From all accounts the fingerprint reader works really well. It appears easy to setup and reads your finger fairly quickly. Of course the true test will be after millions of them are in the wild. Apple also made it a point to note that your fingerprint will be stored locally on the phone and they will not store them in the cloud or collect them. I think with all of the recent NSA revelations people are understandably a bit suspicious about everything so clearing up the FUD from the start is smart.
Apple breezed through iOS 7 yesterday, just touching on some of the highlights of the new operating system. I've said it a number of times. iOS 7 is great and one of the biggest change to the iPhone since it's release. However some people will not like the changes after they update on September 18th and there will be some complaining. I think this will be mostly by people who haven't been paying attention. There's an usual amount of people that know about and/or were using the beta. I've never seen so many non-techie people willingly running a piece of beta software in my life. Teenagers seem to love it, which is good news for Apple.
Apple also announced that iWorks for iOS (iMovie, iPhoto, Pages, Numbers, and Keynote) will now be available for free to everyone that buys a new device starting September 20. I think this is a big deal and is Apple's answer to Google's free productivity software in Google Drive. Apple now provides a substantial amount of software for free out of the box with the iPhone, similar to the Mac experience.
Overall this event was straight forward with few surprises. It's getting incredibly hard for Apple to keep any hardware announcements secret these days. With the scale and how early they have to begin manufacturing these products it's nearly impossible to prevent leaks. I think the iPhone 5s and iPhone 5c will sale like gangbusters and hold them over till next year when they'll probably release a larger version of the iPhone. What I find really strange is that the iPhone 4S is still being sold as the "free" model. My big question is what will they call the next iPhone? If the "C" class of iPhone is for color and fits in the middle they probably won't sale the premium brand for a discount anymore. What happens to the iPhone 5s next year? Are those features just absorbed into the "C" models? Interesting.