Live from Apple’s Town Hall

September 10, 2013, 2:19 PM UTC

Tim Cook. Photo: PED

FORTUNE — Apple’s (AAPL) Sept. 10 special event went largely as expected, thanks to weeks of speculation and what turned out to be remarkably accurate leaks.

The highlights were two new iPhones, the retirement of two old iPhones and prices lowered to zero for software that Apple used to sell.

  • The iPhone 5C, which starts at $99 with a two-year contract,
  • iPhone 5S, which features a new fingerprint ID system and starts at $199 subsidized.
  • The iPhone 5 and iPhone 4 have been phased out. Apple will continue to sell the iPhone 4S (8GB only, alas), which carriers are likely to offer for $0 or nearly so.
  • iWorks, iPhoto and iMovie are now free with every new iOS device.

Also as expected, there was no news about the iPad, Apple TV or the Mac.

The NFC (near-field communications) rumors turned out not to be true. And although a new carrier deal with NTT DoCoMo (60 million subscribers) was announced, there was no mention of China Mobile (740 million).

Wall Street did not react as positively as the audience. Last time I checked, the stock was down nearly $16, although it bounced when it fell below $490.

What follows is my live blog. All times are a.m. Pacific.

11:06 Cook is back. Talking about starting with the experience Apple wants to create and making devices that deliver that experience. Summarizes iOS 7, iPhone 5C, iPhone 5S.

Plays video of an iPhone 5C ad. Very colorful and multilingual.

Thanks all the teams at Apple.

Elvis Costello. Photo: PED

Returns to music. How music is “deeply embedded in our DNA.” Musical guest? Yes. Elvis Costello. Starts with “What’s So Funny About Peace Love and Understanding.”

11:03 Schiller wraps up the iPhone 5S info and gives the prices. $199 for 16 GB, $299 for 32 GB, $399 for 64GB.

Leather cases $39 each.

iPhone 4S sticks around

Pre-order Sept 13 iPhone 5C (no pre-order for the 5S). Both phones go on sale on Sept. 20 in 9 countries, including for the first time, China and Japan. Mentions NTT DoCoMo, but not, repeat not, China Mobile.

A total of 270 partners by end of December.

10:56 Schiller switches to security. Currently protect with a passcode. About half of smartphone customers don’t bother to use.

So… Touch ID. The long rumored fingerprint scanner. The Touch ID capacitve sensor. Scans sub-epidermal layer. Can teach more than one finger, in any orientation. Put it in home button, inside a stainless steel detection ring. Behind a sapphire crystal lens.

You can also use to do purchases on iTunes. Nothing said about other vendors. (I thought I saw Target in the video, but a helpful Apple PR guy dug out the clip and showed me that it was Tanget, just another app on the App Store). No mention of opening the SDK up to developers.

Goes to the Jony Ive video.

10:44 Schiller introduces the M7 — a motion co-processor. Measures accelerometer, gyroscope, compass for a new generation of fitness apps. Can tell whether you are walking, running, driving, etc. Nike, for example, has created an app called Nike Plus Move. Tells you when you moved.

Battery life: 10 hours LTE browsing, 10 hours video. 40 hours standby.

Schiller demos panorama mode. Photo: PED

Camera system: New 5-element lens f 2.2 aperture.

New bigger 15% sensor. Bigger pixels make a better picture, says Schiller. 1.5 microns. iOS 7 software takes advantage. Automatically sets white balance, exposure level, creates local tone map, autofocus with 15 focus zones, takes multiple photos and chooses sharpest.

New “True Tone Flash.” Two LEDs, one cooler white, one warmer amber. Chooses from 1,000 variations to get the right flash. Improved exposure gets applause (which I notice comes from only the front 2 rows.)

Burst mode: If you hold down on shutter it will take 10 frames a second for as long as you hold the button down. The A7 chip sorts through those photos and presents what it thinks is your best shot.

Slo-Mo. To capture scenes HD video at 120 frames a second. You can select what part of the scene you want slow and which fast.

Schiller with iPhone 5S. Photo: PED

10:34 Schiller introduces the iPhone 5S. It is as leaked. Three colors: Silver, Gold and “space grey.”

New A7 system of a chip. 64 bit — the first ever in a phone. This is news.

From 32-bit to 64-bit in one day.

The chip: over 1 billion transistors. 2X as A-6. iOS 7 was quietly reengineered for 64 bits. X-code was also reengineered. Promises “seamless developer transition.” We’ll see.

Claims 40x faster than original iPhone, 2X the A-6. Graphics improvement 56X from first iPhone.

Invites Donald Mustard from ChAIR Entertainment (Infinity Blade) for demo.

Schiller with iPhone 5C. Photo: PED

10:22 Schiller takes stage. Introduces the iPhone 5C with brief video. It is as leaked. One surface. No seams. Made of hard-coated polycarbonate (not very specific). Steel reinforced interior serves as antenna. 4-inch retina display. A6 chip (not A7). Larger battery. 8 MP iSight camera. 3X video zoom. Front facetime HD camara. 1.9 u pixels. Details of bands covered. Can’t tell about China from that.  Five colors: blue, white, pink, yellow, green.

$99 for 16 GB, $199 for 32 GB. Subsidized. He doesn’t offer the unsubsidized price. Will have to ask at the hands-on.

Cases are $29 each. PCB and Android-free. (Yuk yuk.)

Jony Ive does the video. “Unapologetically plastic,” is a good line.

10:21 Switches gears to iPhone. “Some of you may have expected this.” (Big laugh.)

Praises iPhone 5. Most successful ever.

Not lowering price this year. Going to replace it with two new designs. Invites Phil Schiller up.

10:17 Cook is back. Shout outs for designer Jony Ive and Federighi, as the key guys behind iOS 7.

Switches gears to iWork. And iPhoto. iMovie. The thread seems to be that you can create things on Apple’s iOS devices. “No other platform has any apps like these.”

So as of today, all five of these apps will be free. (Big applause). Caveat: WIth any new iOS device.

That’s news.

10:09: Craig Federighi on iOS 7. This is a recap of the slides we saw in June at WWDC. Gets a big laugh from the new sounds, as if that were important. Lingers on new photo options, iTunes Radio.

“Downloading iOS 7 is like getting a whole new device.” Available for free, starting on Sept. 18. The date is news.

10:00 CEO Tim Cook gets a big ovation, although not as big as Steve Jobs used to get. He begins his updates.

iTunes Festival (headlined by Lady Gaga): 20 million people applied for the free tickets. Video makes it look amazing.

Retail: Starting with the original Stanford store, which reopens this weekend with a huge “pavilion” with glass on three sides. One of dozens of expansions Apple is engaged in.

iOS 7: Next month will ship the 700 millionth iOS device. iOS 7 will quickly become the world’s most popular operating system. Invites Craig Federighi to the stage.

Al Gore, foreground, in front of a full house. Photo: PED

9:56 We’re in. It’s a full house, with Apple execs and board members in the first two rows, the TV cameras in the right rear, the press and guests filling out the middle. Phil Schiller declined to be interviewed, but said he’s be available after the event, which pretty much guarantees a hands-on demo after the show.

Fruit spread. Photo: PED

9:45 The breakfast spread was as lavish as I remembered it from the iPhone 4S launch. Lots of fruit, yoghurt, whole grain muffins and lattes made to order. The omelet line four or five reporters deep. The room was hard to navigate with without bumping into a lot of laptop-bearing backpacks.

Some of the celebrity reporters showed up fashionably late: The Wall Street Journal‘s Walt Mossberg, the New York Times‘ David Pogue. I ran into former vice president (and current Apple board member) Al Gore in the men’s room. I didn’t take his picture.

Things are about to get serious. I hope my faulty typing can keep up with the flow of the news.

The hungry press. Photo: PED

8:40 Breakfast isn’t scheduled to be served for 20 minutes, but the press is already lining up. They’re either very hungry or worried Apple will run out of omelets and croissants. The event itself doesn’t begin until 10 a.m. Pacific (1 p.m. Eastern).

8:15 While we’re waiting for Apple to open the doors  (and begin serving what in the past has been an amazing breakfast spread), BiTE Interactive offers the results of its iPhone Anticipation Survey, based on interviews with 1,087 U.S. adults conducted last week. Not surprisingly, iPhone owners are 5 times more likely than Android owners to say they would consider buying one of the new phones.

8:00 The pieces are falling into place. Apple’s online store is closed (in many languages) for updating.

7:30 For reasons known only to Jim Cramer, the Street turned bearish on Apple this morning. After climbing smartly in the two previous trading sessions, Apple shares moved lower in early trading Tuesday.

The broadcast media were there in force. Photo: PED

6:30 As dawn broke, a couple Apple staffers were setting up a press table and the TV guys were doing their stand-ups.

We counted seven satellite trucks, representing CNN, CNBC, Bloomberg, CBS, NBC, KPIX (the local CBS affiliate) and KTLA (Los Angeles’ CW affiliate).

Not a bad turnout. Of the national broadcast outlets, only ABC is MIA. Perhaps their heads are in Syria this morning.

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