CUPERTINO, Calif. – Apple's new iPhone won't win any design awards. It looks exactly like the old one. And reaction to its debut was mixed, in part because it wasn't the iPhone 5 that was widely anticipated.  But Apple executives insist that the 4S packs a lot of punch and unveiled a host of new features for the phone on Tuesday at Apple headquarters here. In addition, they announced the first iPhone (the 3GS model) that will come free with a two-year contract — a move apparently aimed at bringing more step-up buyers into the iPhone family.  Forrester Research analyst Charles Golvin says the price chop opens a "huge" category for Apple — the midmarket consumer, who has bypassed iPhones due to the higher costs. The midmarket phone under $100 is the fastest-growing category for smart phones, he adds.  The new iPhone 4S — on sale a week from Friday — has a faster processor than the iPhone 4. Its camera's resolution and sharpness have been nearly doubled. Web pages and videos load more quickly. And it will be available to Sprint customers in the U.S. for the first time, a huge boon for the No. 3 wireless U.S. carrier. The phone is already available to Verizon Wireless and AT&T customers.  The iPhone, launched in 2007, has dramatically remade Apple into the world's most popular consumer products maker, representing nearly 50% of Apple's annual profits. And the iPhone has helped sell the iPad tablet, increase Apple's computer market share and move millions of songs and apps sold at Apple's online store.  Video: Preview of Apple's new iPhone 4S.  It's clearly the future for Apple. "We believe that over time, all handsets will become smartphones," said Tim Cook, the new Apple CEO who took over from ailing co-founder Steve Jobs in August. "This market is 1.5 billion units annually, and an enormous opportunity for Apple."  Among the most touted feature of the 4S is its 8-megapixel camera, which performs better in low light than the iPhone 4 and offers more vibrant colors. The video camera shoots 1080p high-definition video, up from the 720p video of the iPhone4.  "For many customers, the iPhone 4S will be the best camera … and video camera they've ever had, and they'll have it with them everywhere they go," said Apple Senior Vice President Philip Schiller.  Apple will begin taking pre-orders for the iPhone 4S on Friday, with delivery scheduled for Oct. 14. The phones will come in black or white and cost $199 for 16 gigabytes, $299 for 32GB and $399 for a new 64GB model. The iPhone 4 will sell for $99.  A look at some of the products and services Apple rolled out on Tuesday:  One of the coolest features of the iPhone 4S is one that's not visible — a talking personal assistant named Siri, which combines voice activation and artificial intelligence.  IPhone owners can hit their home button, and ask about the time and weather, or to make a phone call. A female-sounding voice will respond to your request. Siri also works with reviews website Yelp. Need help, say, in finding Indian restaurants in San Francisco? Ask Siri, and it will sort through a selection of restaurants and pick one for you. Apple purchased Siri nearly a year and a half ago.  Google has long had its Voice Search feature and has been researching voice recognition for years. Android-based phones using its Voice Search have been capable of quickly pulling up street directions from voice commands. But Forrester analyst Frank Gillett says that with Siri: "Apple has really set the bar in voice recognition."  Apple executives also touted new features of its iOS 5 software and iCloud, which eliminates the need to sync devices. The software becomes available Oct. 12.  Apple's iCloud will serve up your music with a premium $24.99 yearly service called iTunes Match. It will allow people to upload to Apple's iCloud music from their libraries that was not purchased at iTunes. Music purchased elsewhere can be automatically piped to all devices a user has connected to Apple's iCloud.  The iCloud launch comes as Amazon, Google and Facebook duke it out for media delivery. Last week, Amazon unveiled its low-priced $199 Fire tablet to rival Apple's iPad and its media tie-ins to Amazon's cloud services and stores. Facebook, at its f8 developer conference the week before that, launched an array of music services from Spotify and Rdio to video services including Netflix and Hulu.  ICloud makes all your media available to all your devices and puts Apple in the driver's seat for the consumer cloud. Apple is betting that consumer loyalty to its market-leading iTunes music service will pay off big. For Apple, this is another way to ensure customer lock-in.  "I think iCloud is a huge deal. You don't have to think about which devices any more it just sort of reaches out and connects them," says Gillett. "I absolutely see Apple as leading the way in personal cloud."  Google and Microsoft have elements of helping you organize your content but not in this seamless way across multiple devices, he says.  Apple, which traditionally has introduced new iPods each fall, this year left the current iPod Nano and Touch models virtually intact, except for price cuts. The iPod Touch, Apple's best-selling iPod, now starts at $199, down from $229, and the Nano starts at $129, down from $149. The Nano adds a new look — digital watch faces, including one with Mickey Mouse. There's a white iPod Touch, as well.  At the session, Apple updated sales statistics on many area of its businesses.  OS X Lion, the operating system update for its Macintosh computers, has more than 6 million downloads so far, 80% more than the previous edition, Snow Leopard.  Cook said Apple has sold more than 300 million iPods in the 10 years that the devices have been for sale. There are now 20 million songs available in the iTunes Music Store, up from 200,000 when it started.  The App Store has 500,000 apps available, and has seen 18 billion downloads to date, Cook said.  Researcher Gartner forecasts 468 million smartphones will be sold worldwide this year, a number that will climb to 1 billion in 2014. Apple's iOS smartphone operating system accounted for 18% of the worldwide market in August compared with Google's Android at 43%, according to Gartner. Google's Android has seen explosive growth in the past year. A year ago, Google had 17% of the market vs. 14% for Apple's iOS.
New phone offers faster processing and downloads, a greatly improved camera and voice-activated assistance. Heading to Sprint for first time.