iPhone gets its upgrade, all under the hood

Apple introduced its long-awaited new iPhone on Tuesday. But it wasn't an iPhone 5. That will have to wait.

Instead, the company unveiled something that looks an awful lot like an iPhone 4 on the outside, with an innovative feature that turns the device into a voice-activated mobile assistant for scheduling appointments and performing other tasks.

It's a measure of how Apple has habituated its legions of fans to regular, eye-catching design changes that the news about the latest version of the iPhone qualified as a disappointment for some. Grumbling about the announcement of the new phone, the iPhone 4S, spread on Twitter throughout the day and the company's shares fell as much as 5 percent, though they regained most of those losses by the end of trading.

"At the end of the day, there are still going to be long lines for this," said Gene Munster, an analyst at Piper Jaffray. "They could have been even longer if they'd changed the hardware more."

The new model of the iPhone, which will go on sale Oct. 14, with preorders starting Friday, is virtually indistinguishable from its predecessor on the outside. But beneath its skin Apple made big changes, packing it with a better camera that shoots crisper pictures and video. The device also includes a more powerful chip, the A5, the same microprocessor that is the brains of the iPad, for producing better graphics and other improvements.

Timothy D. Cook, Apple's chief executive, presided over the event just as Steven P. Jobs had on similar occasions before he left the top job in August. Mr. Cook said that although the iPhone 4 is the best-selling smartphone in the world, Apple believes that the company still has plenty of people it wants to convert.

"We believe over time all handsets become smartphones," he said. "This market is 1.5 billion units annually. It's an enormous opportunity for Apple."

Mr. Cook and other Apple executives also highlighted an array of supporting products for the new phone, but the centerpiece of the presentation, and of the new device, is the "virtual assistant" feature, Siri, named after a company Apple acquired last year that originally developed the technology. While the iPhone 4 already responds to some basic voice commands - to make phone calls, for example - Siri is designed to comprehend a much broader range of instructions in natural language.

For example, Apple executives demonstrated the technology by asking an iPhone, "Do I need a raincoat today?" to which the device responded, "It sure looks like rain today."

While Apple's decision not to call its new phone the iPhone 5, as many expected, raised some eyebrows, it has some precedent. A couple of years ago the company introduced the iPhone 3GS, which made modest improvements over the iPhone 3G. Michael Mace, the chief executive of a mobile application start-up and a former Apple and Palm executive, said Apple most likely wanted to telegraph that the iPhone 4S was an incremental change to the product, rather than a big redesign denoted by a change in the model number.

"You don't want to oversell what you're doing so you hurt your credibility," Mr. Mace said.

Even incremental changes to the iPhone can help sales. Mr. Munster of Piper Jaffray said the annual growth rate in the number of iPhones that Apple sold during the fiscal year the iPhone 3GS was introduced was 93 percent, compared with 78 percent when the iPhone 3G came out.

With the new phone, Apple is taking on a growing challenge in the mobile market from the Android operating system made by Google. Smartphones powered by Android now outsell iPhones by more than two to one. While Android phones also let people use basic voice commands to do simple tasks, Apple is betting that the more sophisticated capabilities of Siri will make it stand out.

Many of the best minds in technology in the last several decades have been stymied by how to decipher speech, given variations in how people talk. Mr. Mace called what Apple is doing the "holy grail" for mobile devices; voice recognition could make it much easier for people to use them on the go without having to peck words into a keyboard. But he said the technology needed to be accurate or users would ignore it.

"When you start talking to a computer you expect it to really understand you, and if it doesn't, you get really frustrated," he said. "If Siri is like that, forget about it."

Using Siri, the phone can set an alarm clock with the command "Wake me up tomorrow at 6 a.m." or provide a stock market quote if a user asks, "How's the Nasdaq doing today?" The command "Remind me to call my wife when I leave work" will result in such a reminder on the phone, requiring a user to identify the geographic boundaries of their office on the device through its location technology.

In some ways, Siri is reminiscent of Hal 9000, the intelligent computer system in the film "2001: A Space Odyssey," though the iPhone presumably won't be able to turn on its users the way its fictional counterpart did. In one demonstration, Apple's senior vice president, Scott Forstall, asked Siri, "Who are you?"

"I am a humble personal assistant," the phone responded, in an awkward synthesized voice.

While the new iPhone was the headliner at the event, held at the company's headquarters in Silicon Valley, the executives spent nearly as much time showcasing new features in an array of supporting products, including iCloud, which allows users of Apple mobile products to automatically back up from and synchronize information between devices.

Prices for the iPhone 4S start at $199 for a model with 16 gigabytes of storage. Apple will continue to sell its older iPhone 4 through its wireless carrier partners, which will drop the price to $99 from $199 when customers commit to a two-year contract. An older model, the iPhone 3GS, will be free, instead of $49, with a two-year contract.

The new phone will be available on the AT&T, Verizon and Sprint networks and will also work internationally.

The event was a closely watched debut for Mr. Cook. Mr. Jobs was a master pitchman for Apple's products, captivating audiences with introductions that seemed off the cuff but were always meticulously rehearsed. Mr. Jobs, the company's founder, left for health reasons and became chairman of Apple's board.

"It's impossible to replace Steve Jobs, and you could feel that in the energy level in the room," said Mr. Munster, though he said Mr. Cook "did an excellent job."