Apple Is Set to Announce Two iPhones

At an event on Tuesday at its Cupertino, Calif., headquarters, the company is set to unveil for customers worldwide a new iPhone with a faster processor, along with another model that will be sold at a lower cost.

The company’s profit growth has slowed in response to a saturated handset market in America and parts of Europe. Many people already own a smartphone and are not upgrading to new devices as often as before.

A lower-cost smartphone could allow Apple to expand into overseas markets — especially China, where the iPhone has been highly desired among many consumers but is just out of reach because of its price.

“A cheaper model will open up the market significantly for Apple,” said Chetan Sharma, an independent telecom analyst who consults for phone carriers.

Apple declined to comment on the new products. But analysts expect the higher-priced model to be an improvement over the current iPhone, including a faster processor and better camera flash, as well as a fingerprint sensor for security.

The second iPhone is expected to be a cheaper version of the soon-to-be-outdated iPhone 5, coming in a variety of colors, with a plastic case instead of aluminum. Analysts expect the full price of the lower-cost iPhone to be $300 to $400, positioning it as a midtier product.

Apple has been enormously successful, with the iPhone driving most of its revenue. In the second quarter, the company took 53 percent of the profit in the global smartphone market, with Samsung Electronics, which uses Google Android software to run its smartphones, taking the rest, according to a survey by Canaccord Genuity, an investment bank.

But both Apple and Samsung face a common enemy: the tide of manufacturers that produce dirt-cheap Android phones. While they make all the profits, Apple and Samsung have seen their combined share of the worldwide smartphone market drop to 43 percent in the second quarter from 49 percent a year earlier. The makers of cheaper phones — including Huawei, Yulong and ZTE of China, and Micromax and Karbonn of India — are raking in sales in emerging markets where high-end smartphones are not popular.

“We’ve had several indications from the handset market that vendors are in real trouble,” said Tero Kuittinen, an analyst for Alekstra, a mobile diagnostics firm. “The biggest threat to all the companies seems to be the low-end Androids.”

In terms of sales, smartphones surpassed traditional flip phones this year. There are a few markets remaining where traditional cellphones are still outselling the smartphone, including India, Brazil and Russia. Data from Qualcomm suggests that Latin America, China and India are adding substantially higher numbers of smartphone subscriptions than North America, Japan, Korea and Europe.

China, with its huge population, is an attractive target for Apple. But Timothy D. Cook, Apple’s chief executive, said recently in a call with investors that the company was puzzled about why sales of its products were struggling in China. Sales there fell 4 percent in the second quarter compared with the same quarter last year. And Apple’s sales in Hong Kong were down about 20 percent.

A cheaper iPhone could help it gain traction in China, depending on its cost.

Analysts said the introduction of the cheaper iPhone would probably coincide with an expected partnership deal with China Mobile, which has about 700 million subscribers — about seven times as many as Verizon Wireless. Capturing even a small percentage of China Mobile customers would translate to tens of millions more iPhone sales.

Apple already sells its phones in China through China Telecom, a major network operator, but it slipped into sixth place among smartphone makers there in the second quarter, with a share of only 4.8 percent, according to Canalys, a research firm. Over all, China is the largest smartphone market in the world, accounting for one-third of worldwide shipments of smartphones in the second quarter; the United States is in second place, accounting for about 14 percent of shipments in the same period, according to Canalys.

Despite Apple’s efforts to keep its plans secret, clues about the new iPhones leaked out. China Telecom briefly posted a message last week on a blog platform soliciting early orders for the new devices. It identified the high-end model as the iPhone 5S, and the lower-cost one as the iPhone 5C. The post was later removed. A spokesman for China Telecom declined to comment, citing nondisclosure agreements.

In Japan, where Apple is much stronger but faces a renewed challenge from domestic smartphone makers like Sony, the company has struck a deal to sell the iPhone with the country’s biggest mobile phone carrier, NTT Docomo, two people briefed on the situation said Friday. Docomo has 60 million customers, but it has been losing market share to Japan’s other two main mobile operators, SoftBank and KDDI, which operates under the brand name au. Both have been marketing Apple’s phones aggressively, giving Apple a 40 percent share of smartphone sales in the first quarter, according to IDC, a research firm.

Historically, so that it can protect the quality of its products as well as profit margins, Apple has refused to make cheaper products just to get more customers. Therefore, a lower-cost iPhone would most likely be positioned as a midtier product, similar to the approach Apple took with the iPad Mini. At $330, the iPad Mini is cheaper than the bigger, $500 iPad, but not as affordable as the smaller Android tablets offered by Google and Amazon, which cost from $160 to $230.

Realistically, a lower-cost iPhone will be $300 to $400 at full price, Mr. Kuittinen, the Alekstra analyst, said, significantly less than the current iPhone, which costs $650. Overseas, many phone carriers charge full price because they do not subsidize the upfront cost of a smartphone the way carriers do in the United States. And while a lower-cost iPhone would drive up Apple’s revenue, it would probably not be a blockbuster hit in economically disadvantaged markets, Mr. Kuittinen said.

“Nobody is saying Apple should have a $130 iPhone,” he said, “but if they price this iPhone 5C at $400 or above, it’s just not going to be effective in countries like India, China or even Brazil.”

Still, even if the price is fairly high, a cheaper iPhone should appeal to a subset of people in developing countries who flaunt gadgets as status symbols, like jewelry. People who were on the fence about buying an iPhone might pay a little extra just to be able to show off, Mr. Sharma, the telecom analyst, said. “Consumers are willing to shell out money to own a brand,” he said. “I think a $300 price gives them a chance to own it.”

Eric Pfanner contributed reporting from Tokyo.

State of the Art: The Moto X From Google, iPhone’s Latest Challenger

The one truly huge, magnificent, radical idea of the iPhone, back when it was introduced in 2007, was to get rid of buttons. Make the whole phone a black rectangular touch screen.

By now, every company and its brother has done that. Everybody’s added voice recognition, GPS and navigation. Everybody’s sharpened up the screens to the point where you need a microscope to tell the difference.

So now what? How do you distinguish your phone from the more than 4,000 other touch-screen phones? (That’s not a joke. There have actually been 3,997 different Android phone models so far. And six iPhones and a motley assortment of Windows and touch-screen BlackBerry phones. Heaven help the landfills.)

With much fanfare, Google proudly presents its answer: the Moto X.

This phone ($200 with contract, 5.1 x 2.6 x 0.4 inches) is the first that Motorola has produced since Google bought it a year ago for $12.5 billion.

By looking at it, you’d never guess that this is the Android phone that Motorola hopes will change everything. Its curved back is plasticky, not classy metal (like the HTC One) or glass (like the iPhone 5). Its comfortably 4.7-inch screen looks great, but it isn’t as big or sharp as the Samsung Galaxy S4 and the HTC One. The phone is plenty fast, but its processor isn’t the latest and greatest.

But the Moto X does offer five features that no phone has offered before.

Feature 1: You can design your own color scheme. You’re offered a choice of 18 colors for the back panel, black or white for the front, and seven colors for the accents (the buttons and ring around the camera lens). The color choices are excellent; the odds of you and your frenemy showing up at a party with an identical Moto X phone are one in 252.

Later this year, you’ll even be able to order a back panel made of real wood — in bamboo, teak, ebony or rosewood. Motorola’s testing shows these beautiful panels to be just as tough as plastic (although more susceptible to termites, I’m guessing).

While you’re online, you can also order color-matched cases and earbuds, specify the wallpaper you want or request an engraved message for the back. For now, only AT&T offers the color choices. Verizon, Sprint and T-Mobile will offer only black or white until later this year.

You get your customized phone within four days, courtesy of Feature 2: it’s assembled right here in these United States. The components are still made in Asia, but they’re put together in Texas — you can lose less sleep worrying about underpaid Chinese workers.

Feature 3 is the most useful: touchless mode. As with Siri on the iPhone, you can command the phone to dial a number, send a text, open an app, set your alarm, look up a fact on the Web, and so on.

But unlike Siri, you don’t hold down a button to speak. The phone is always listening, even when it’s in your car’s cup holder.

It works remarkably well, as long as you precede your command with the salutation, “O.K., Google Now.” Without ever taking your eyes off the road, you can say, “O.K., Google Now. Give me directions to the Empire State Building.” Or, “O.K., Google Now. Remind me at 8 p.m. to give the dog his pill.” Or, “O.K., Google Now. Make an appointment for Thursday at noon with Bob.”

This truly inspired idea is a leap forward in both safety and convenience. It owes its success to a special chip that does nothing but listen all day long. It does, however, come with fine print.

For example, you have to train the phone to recognize your voice. In a silent room, you have to say “O.K., Google Now” exactly the same way three times.

If you’ve password-protected your phone, this feature loses much of its power. It won’t execute most commands until you first pick it up and unlock it. So much for touchless.

And Android’s voice commands are still no match for Siri. The phone recognizes the basics, like “Wake me at 7:30 a.m,” “Open Angry Birds,” “What’s Google’s stock price?” and “Check the forecast for Memphis on Friday.”

Pogue's Posts: An Easy Way to Capture Live Video of Your iPhone’s Screen

Reflector works by tricking an iPhone into thinking that your Mac or PC is an Apple TV.

As alert readers might have discovered, my videos are back. They’re called “60 Seconds with David Pogue,” and they illustrate whatever my column is about. I make one about every other week. (Here is last week’s, on light bulbs.)

The thing is, more and more often, creating tech videos requires filming the screen of the phone, and that’s a nightmare. There’s grease, there are reflections, there are exposure problems. And there are blocking problems — as you demonstrate some phone feature for the camera, you can’t help your hand getting in between the camera and the phone, blocking the very thing you’re trying to film. (The camera starts focusing on your hand instead of the screen, and things just keep getting worse.)

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If you saw my video about Google Maps, you might have noticed that I’ve solved this problem. I’ve found a way to capture the live video from the iPhone’s screen — brilliantly, clearly, easily and without using a camera at all.

It’s a $13 Mac program called Reflector (a time-limited trial is available), and it transmits the iPhone/iPad/Touch’s video image to the screen of your Mac or PC. From there, you can record it or project it.

The clever part is how it works. AirPlay is Apple’s wireless video-transmission technology. Most people use it to view their Mac, iPhone or iPad’s screen image on a big TV — for example, to watch a Netflix or Hulu show on the TV screen instead of the laptop. (Your TV requires an Apple TV box, about $100.)

But Reflector turns AirPlay inside out. It tricks the iPhone into thinking that your Mac or PC is an Apple TV.

Both have to be on the same network. When you’re ready to project the iPhone to the computer, you double-press the Home button. The usual app switcher appears. Scroll it to the right until you see the AirPlay button. Tap it, choose Reflector’s name, and boom: the iPhone’s live video image shows up on the computer’s screen, with incredibly high resolution and clarity. (It also works with the iPad or iPod Touch.)

Reflector transmits audio, too. In other words, the computer plays whatever the phone is playing.

You can opt to see a frame around the image, representing the body of the phone or tablet itself. You can even specify which iPhone/iPad color you want that frame to be.

There’s a Start Recording command right there in the menu. It creates a movie of whatever you’re doing on the phone, which is handy for people who make tech videos (ahem).

I couldn’t believe how simple and smooth the answer was to the problem I’ve had for years. Reflector is terrific for anyone who wants to make videos, but it’s also great for trainers, teachers or product demos. It means that, for the first time, there’s a high-quality way to project the phone’s image onto a big screen (via a projector attached to the computer) — and to amplify its sound.

I haven’t researched Android equivalents — if they exist, maybe you can let us know in the comments to this post. But for iPhone and Mac, Reflector is a brilliant solution to a sticky problem.

Gadgetwise Blog: Walmart Cuts Prices on Some iPhones and iPads

Apple’s products are known for elegance, ease of use, and for being unavailable at a discount. The price is the price. Unless maybe you are a retail behemoth with a lot of clout like, say, Walmart, which is discounting the iPhone and the iPad.

A 16GB iPhone 5 has been marked down to $127 from the usual Walmart price of $189.87. The phone commonly retails for $200 with a two-year cellphone contract from a carrier.

The deal is only available in Walmart stores – it cannot be purchased over the Web – and it requires a two-year contract from one of three carriers, AT&T, Verizon or Sprint, which can be purchased at Walmart.

The plans are the same as the ones you would buy directly from the carriers.

There is also a discount on a 16-gigabyte iPad with Retina display, which is selling for $400, down from the retail price of $500. It is not the latest iPad, but an earlier model. Starting Dec. 17, Walmart will also include a $30 iTunes gift card with each iPad.

Bits Blog: Shortage of New iPhones Spooks Apple Investors

Every night for the last week, Gene Munster, an analyst at Piper Jaffray, or one of his co-workers has tried to buy an iPhone 5, logging on to Apple‘s Web site about an hour after the company begins letting people reserve one of the phones for next-day pickup in Apple retail stores. So far they haven’t been able to buy a single iPhone 5 that way.

In some cases, Mr. Munster and his co-workers were able to reserve phones for next-day pickup if they logged on promptly at 10 p.m. But he said their unsuccessful efforts at reserving a phone later were intended to check whether there was sufficient inventory that a more casual customer could obtain an iPhone 5.

“At what point can people walk in and buy phones?” he said. “We’re not close to that.”

The scarcity of iPhone 5s is the main reason Apple’s shares, after bursting through the $700 mark in late September, have tumbled nearly 10 percent over the last several weeks, analysts say. On Tuesday, Apple’s stock closed at $635.85.

Although it’s better for Apple that it appears to be suffering problems of supply rather than demand, both situations result in lost or delayed sales. Analysts who have poked around in Apple’s supply chain believe that the holdup could be the result of a shortage of the new displays that Apple is using in the iPhone 5.

Apple’s online store now shows a shipping delay of three to four weeks for the new iPhone.

The iPhone 5 shortage has largely overshadowed a separate lift that Apple’s sales could get from the release of a smaller, less expensive iPad, which the company is expected to release in the coming weeks. Mr. Munster estimated that 90 percent of his recent conversations with investors have focused on iPhone 5 supply issues.

“The iPad mini is almost like an afterthought at this point,” he said.

Foxconn Said to Use Forced Student Labor to Make iPhones

Foxconn has acknowledged using student “interns” on manufacturing lines, but says they are free to leave at any time. But two worker advocacy groups said Monday that they had spoken with students who said they had been forced by their teachers to assemble iPhones at a Foxconn factory in Zhengzhou, in north-central China.

Additionally, last week Chinese state-run news media reported that several vocational schools in the city of Huai’an, in eastern China, required hundreds of students to work on assembly lines at a Foxconn plant to help ease worker shortages. According to one of the articles, Huai’an students were ordered to manufacture cables for Apple’s new iPhone 5, which is expected to be introduced on Wednesday.

“They said they are forced to work by the teachers,” Li Qiang, founder of China Labor Watch, one of the advocacy organizations and a frequent critic of Foxconn’s labor policies, said in an interview on Monday. Mr. Li said his staff had spoken with multiple workers and students who, as recently as Sunday, said that 10 of 87 workers on an iPhone assembly line were students.

“They don’t want to work there — they want to learn,” said Mr. Li. “But if they don’t work, they are told they will not graduate, because it is a very busy time with the new iPhone coming, and Foxconn does not have enough workers without the students.”

Foxconn, in a statement, said that students made up just 2.7 percent of its 1.2 million-person work force in China — about 32,000 workers — and that schools “recruit the students under the supervision of the local government, and the schools also assign teachers to accompany and monitor the students throughout their internship.”

A spokesman for Apple declined to comment on the recent cases, but he said Apple’s code of conduct tells suppliers to follow local labor laws when dealing with interns and other workers.

Foxconn has come under intense scrutiny in recent months over working conditions inside factories that manufacture smartphones, tablet computers and other electronic devices for Apple, Dell, Hewlett-Packard and other technology giants. Investigations by newspapers, outside groups and companies like Apple itself have revealed illegal amounts of overtime, crowded working conditions, under-age workers, improper disposal of hazardous waste and, in some cases, industrial accidents that have killed four people and injured more than 100 at Foxconn and other Chinese factories that supply Apple.

Earlier this year, following highly publicized reports of such problems, Apple asked an outside organization to audit working conditions inside the plants where the bulk of iPhones, iPads and other Apple products are built. In the wake of that audit, Foxconn announced it would significantly raise wages for many of its employees and reduce overtime hours to come into compliance with Chinese law.

In August, the Fair Labor Association — the group hired by Apple to audit Foxconn — said Foxconn had made progress at cutting employees’ hours and improving working conditions, but that those shifts would require Foxconn to recruit “tens of thousands of extra workers.” The group also said that Foxconn and Apple had adopted policies to make sure that student interns knew they could resign from Foxconn and still graduate, and to link the jobs they performed inside Foxconn with their studies.

“I am concerned about these recent reports, and we’re following up,” said Auret van Heerden, president and chief executive of the Fair Labor Association, in an interview. “If there have been any breakdowns in policies, we expect changes to be made.”

Worker advocates say Foxconn is under intense pressure at critical moments — like leading up to the release of a new product, like the iPhone 5 — to fill huge orders quickly.

Charles Duhigg reported from New York.

This article has been revised to reflect the following correction:

Correction: September 13, 2012

An article on Tuesday about new labor issues at Foxconn, a Chinese factory that makes Apple products, misstated the number of explosions that have occurred at the company’s plants. Only one explosion has occurred at a Foxconn plant, not “several.” (There have been several explosions at other companies that make Apple products in China.)

Foxconn Said to Use Forced Student Labor to Make iPhones

Foxconn has acknowledged using student “interns” on manufacturing lines, but says they are free to leave at any time. But two worker advocacy groups said Monday that they had spoken with students who said they had been forced by their teachers to assemble iPhones at a Foxconn factory in Zhengzhou, in north-central China.

Additionally, last week Chinese state-run news media reported that several vocational schools in the city of Huai’an, in eastern China, required hundreds of students to work on assembly lines at a Foxconn plant to help ease worker shortages. According to one of the articles, Huai’an students were ordered to manufacture cables for Apple’s new iPhone 5, which is expected to be introduced on Wednesday.

“They said they are forced to work by the teachers,” Li Qiang, founder of China Labor Watch, one of the advocacy organizations and a frequent critic of Foxconn’s labor policies, said in an interview on Monday. Mr. Li said his staff had spoken with multiple workers and students who, as recently as Sunday, said that 10 of 87 workers on an iPhone assembly line were students.

“They don’t want to work there — they want to learn,” said Mr. Li. “But if they don’t work, they are told they will not graduate, because it is a very busy time with the new iPhone coming, and Foxconn does not have enough workers without the students.”

Foxconn, in a statement, said that students made up just 2.7 percent of its 1.2 million-person work force in China — about 32,000 workers — and that schools “recruit the students under the supervision of the local government, and the schools also assign teachers to accompany and monitor the students throughout their internship.”

A spokesman for Apple declined to comment on the recent cases, but he said Apple’s code of conduct tells suppliers to follow local labor laws when dealing with interns and other workers.

Foxconn has come under intense scrutiny in recent months over working conditions inside factories that manufacture smartphones, tablet computers and other electronic devices for Apple, Dell, Hewlett-Packard and other technology giants. Investigations by newspapers, outside groups and companies like Apple itself have revealed illegal amounts of overtime, crowded working conditions, under-age workers, improper disposal of hazardous waste and, in some cases, industrial accidents that have killed four people and injured more than 100 at Foxconn and other Chinese factories that supply Apple.

Earlier this year, following highly publicized reports of such problems, Apple asked an outside organization to audit working conditions inside the plants where the bulk of iPhones, iPads and other Apple products are built. In the wake of that audit, Foxconn announced it would significantly raise wages for many of its employees and reduce overtime hours to come into compliance with Chinese law.

In August, the Fair Labor Association — the group hired by Apple to audit Foxconn — said Foxconn had made progress at cutting employees’ hours and improving working conditions, but that those shifts would require Foxconn to recruit “tens of thousands of extra workers.” The group also said that Foxconn and Apple had adopted policies to make sure that student interns knew they could resign from Foxconn and still graduate, and to link the jobs they performed inside Foxconn with their studies.

“I am concerned about these recent reports, and we’re following up,” said Auret van Heerden, president and chief executive of the Fair Labor Association, in an interview. “If there have been any breakdowns in policies, we expect changes to be made.”

Worker advocates say Foxconn is under intense pressure at critical moments — like leading up to the release of a new product, like the iPhone 5 — to fill huge orders quickly.

Charles Duhigg reported from New York.

This article has been revised to reflect the following correction:

Correction: September 13, 2012

An article on Tuesday about new labor issues at Foxconn, a Chinese factory that makes Apple products, misstated the number of explosions that have occurred at the company’s plants. Only one explosion has occurred at a Foxconn plant, not “several.” (There have been several explosions at other companies that make Apple products in China.)