It is thinner and lighter than previous models with a bigger screen, and is made entirely of glass and aluminum.
It will also come with the capability to connect to the faster 4G cellular networks known as LTE both in the U.S., Canada and overseas — some competing phones have had this ability for a year and an half.
Apple also says the iPhone 5 will have faster Wi-Fi, along with a faster processing chip.
Advance orders will start this Friday. It will start shipping on Sept. 21 in the U.S., Canada and other countries, plus additional markets a week after that.
One big change — the iPhone is getting a new connector to attach to computers and chargers. It had been using the same one from the iPod.
Apple marketing head Phil Schiller says the old connector has "served us well for nearly a decade, but so much has changed."
That means the new iPhone won't be compatible with old accessories, though Schiller says accessory makers are already working to update their products. Apple will sell an adapter to work with older accessories.
Schiller says the new phone is 7.6 millimetres thick and weighs 122 grams. It's 18 per cent thinner than the iPhone 4S and 20 per cent lighter. It also has a bigger screen, measuring 4 inches diagonally.
The larger screen makes room for another row of icons.
Schiller adds the new phone will have a battery with eight hours of talk time and eight hours of Web browsing.
Sales of Apple's previous generation iPhones are still strong, though the company lost the lead in smartphones to Samsung this year. Samsung Electronics Co. benefited from having its Galaxy S III out in the U.S. in June, while Apple was still selling an iPhone model it released last October.
The new iPhone will allow Apple to recapture the attention and the revenue.
The iPhone 5 is also a formidable threat to Research In Motion.
The Waterloo, Ont.-based company — once known as Canada's high-tech heavyweight — has been working to turn around its operations as consumers switched to the iPhone and other smartphones running Google's Android operating system.
The company's future success rides on the unveiling of its BlackBerry 10 operating system, which has suffered two major delays that have pushed its debut into early 2013 — past the holiday shopping season that Apple has squarely in its sights.
The new iPhone will have an 8-megapixel camera, with special features to eliminate noise in images and perform better in low light. There's also a feature that lets you stitch multiple images of a landscape for a panoramic view.
It has three microphones instead of two. They are located on the back, the front and the bottom. It also comes with a noise-cancelling earpiece for better sound.
Apple is also releasing a new version of its phone software, iOS 6. It will have a new mapping software, as Apple ditches the one from Google it had been using. The new software will have turn-by-turn voice navigation — a feature Google had limited to Android versions of its mapping app.
Apple says the phone's virtual assistant, Siri, will be giving the directions.
The new phone software promises enhancement to email. You can deem certain people "VIPs" and flag emails from them so you can go back to them more easily.
Apple also demonstrated Passbook, a central place to keep your boarding passes, tickets and gift cards.
It's improving Siri, which is supposed to get better at fielding questions about movies, restaurants and other things. Apple is partnering with OpenTable Inc. to make reservations, for instance.
The new software also has a better tie-in with Facebook. You can talk to Siri to post a status update, for instance.
And Facetime video calls will work over cellular networks for the first time. It had been limited to Wi-Fi connections.
The new phone will come in black and white.
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