Back in June, Apple showed off the new iOS 7. And ever since June the endless leaks of both next generation iPhones have left absolutely nothing to the imagination. We’ve known what the new iOS 7 would bring and we knew what the iPhone 5S and 5C would at least look like, along with a variety of details and mostly accurate speculation. When viewed as either an operating system or pieces of essentially disjointed hardware, there isn’t much to give anyone a sense of innovation – a word that has recently taken on a very over-used sense of importance when speaking of Apple (we admit we’re as guilty on this front as anyone else).

But, when the two are finally married into the holistic entities that are now the complete and fully announced iPhone 5S flagship and the 5C, we begin to see innovation. But that innovation requires actively interacting with both the new iPhones and the new iOS 7. And more specifically, the now blazingly fast iPhone 5S – with its new 64-bit A7 processor – delivers iOS 7 performance that creates a true WOW factor in those user interactions. We won’t rehash here the numerous features of iOS 7, but let’s just say that as much as iPhone 5, 4, 4S and 5C owners (and iPad users) will experience the benefits of iOS 7, they will not be the experiences and interactions that 5S users will enjoy.

And therein lies the secret sauce!

The word on these WOW interactions will drive all non-5S users to upgrade. This is the way Apple will unlock new sales to its already established base of 300+ million users – revenue numbers will be outrageous. The older iPhones will all be handed down to family and friends currently using cheap Android phones, and with the sturdiness of the new polycarbonate-based 5C (along with the sorts of colors tweens and 45-year-olds who still think they are tweens thrive on) there will be an entirely new market of users – especially in China. The total population of iOS ecosystem users will explode, and Apple will see enormous increases in ecosystem (non-device) revenue as well.

This is the sort of stuff that both Google and Samsung can only dream about.

As we predicted, Apple has introduced the expensive version of a cheap smartphone. Yes, the initial price of the new iPhone 5C is too high for the long run. But Apple is playing a short term game here. Initially there will be a great many people who will buy the 5C at the announced price point. But once these buyers are out of the pipeline, Apple and its numerous carrier partners will have plenty of flexibility to adjust pricing – not only in the U.S. (where there is less pricing sensitivity), but in the global markets, especially China. Anyone who thinks that 5C pricing is too high out of the starting gate is completely missing how the game will be successfully played by Apple.

To summarize, in a few short days Apple will bring iOS 7 and its two new iPhones into play, and our prediction is that users will create a huge groundswell of demand. We won’t detail here what iOS 7 delivers – iOS 7 is all of the things we detailed back in June 2013. These features include Control Center, Notification Center, improved Multitasking, AirDrop, enhanced Photos, a new Safari, a new Siri and of course iTunes Radio.

But now it is time to take a closer look at what the new hardware puts on the table.

The iPhone 5S

The first thing we will note about the iPhone 5S is the screen – it is exactly the same as the iPhone 5 in both size and capabilities. That 4-inch screen remains steadfastly Apple’s preferred screen size, and we are certainly glad that Apple has maintained that size. That said, we predict that the next versions of the iPhone will finally deliver on larger screen sizes. These are likely to appear in 2014, but we would not be surprised to see at least a 4.7-inch screen show up when the next round of iPads are formally introduced. In its own way, maintaining the screen size is a strong differentiator relative to how Apple runs its business.

The absolutely most important new feature of the 5S is its all-new A7 chip, which makes iPhone 5S the world’s first 64-bit smartphone. This truly begins to approach desktop- and enterprise-class architecture. Yes, this means gaming and running apps becomes a different and qualitatively better experience, but the real power here is in how effortlessly the iPhone 5S will deliver on iOS 7 interactions.

This includes the various subtle UI touches that have been incorporated into iOS. Response time essentially disappears as an issue. Just as the retina display has eliminated pixels from the UI, the new A7 processor and iOS 7 (which was built from the ground up with the A7 platform as its reference hardware model) now essentially remove those often annoying little stutters that all smartphones always display when manipulating the screen or performing most smartphone functions.

The entirely new A7 chip delivers up to twice the CPU and graphics performance - everything on the iPhone 5S is faster, from launching apps and editing photos to playing graphics-intensive games. The A7 architecture now also supports OpenGL ES version 3.0. This is huge in terms of delivering rich and complex visual effects that will come close to what is now available on Macs, PCs and gaming consoles. This gaming capability is critical to building on the iOS 7 interactions as we’ve noted above.

It is as yet unclear how the A7 and supporting architecture will affect battery life. Apple makes no bold predictions for improved performance here and we are left to assume that it will likely be on a par with the iPhone 5. We’ll leave it to the websites that test these sorts of things to report back on this – but ultimately it will be worth of mouth through millions of users that will tell the real story here.

Wearable Tech!

Next, we get to what we are referring to as the “secret” in our headline. The iPhone 5S also includes the new M7 motion coprocessor. This critical new addition to the iPhone design gathers data from the iPhone’s accelerometer, gyroscope and compass to offload work from the A7. This will significantly improve power efficiency and those UI interactions.

Here is the secret end of it: developers will be able to access new CoreMotion APIs that take advantage of M7, which means developers will be able to create much better fitness and activity apps that go well beyond what other mobile devices can offer. The M7 motion coprocessor continuously measures your motion data, even when the device is asleep, and saves battery life for pedometer or other fitness apps that use the accelerometer all day. Well, OK, that doesn’t sound all that secret.

But what we have in hand here is what Apple itself needs in order to deliver on wearable technology. Without it, the type of iWatch or iRing or iWatever that Apple wants to deliver would not be possible. With the iPhone 5S and the next generation following the 5S, Apple’s wearable tech foundation begins to tangibly fall in place. Hey, that is very cool!

Next – and make sure to keep in mind our discussion above on eliminating those “user interface stutters” – the iPhone 5S introduces Touch ID – the much discussed fingerprint scanning capability that everyone has been going on and on about. Touch ID is a true innovation that allows a user to simply and securely unlock the iPhone with simply the touch of a finger. No, Apple has not added a cumbersome second button next to the iPhone’s home screen button. That is simply not the Apple way. Instead the scanner is built into the home button. Note the new home button in the image below.

Touch ID uses a laser cut sapphire crystal together with the capacitive touch sensor to take a high-resolution image of the user’s fingerprint. It then analyzes it to provide accurate readings from “any angle.” This is critical, again, to removing that UI stutter. Touch ID setup to recognize a fingerprint is easy, and repeated use trains the device, providing constantly improved interactions.

The Touch ID sensor recognizes the touch of a finger so the sensor is only activated when needed, which of course should preserve some battery life. All fingerprint information is encrypted and stored securely in the Secure Enclave inside the A7 chip on the iPhone 5S. It is never stored on Apple servers or backed up to iCloud.

Touch ID can also be used as a secure way to instantly approve purchases from the iTunes Store, App Store or iBooks Store – again improving how the device, iOS 7 and the user interact. This seems almost trivial when one reads it, but we strongly believe these kinds of subtle UI touches are part of what defines the iPhone 5S as being truly innovative. (Here’s a further example – Samsung’s eye tracking capability on the S4 sounds cool, but it hardly ever works in a way that most users find enjoyable enough to keep using – that spells gimmick to us rather than true ease of use.)

Touch ID also needs to be considered within the context of mobile payments. The iPhone 5S continues the Apple tradition of avoiding the use of NFC (near field communication) sensors. How Touch ID will play with Passbook remains to be seen but it is intriguing to think about how mobile payments will work within the iOS ecosystem with Touch ID now in hand.

Of course there are also camera improvements – an area where Apple has needed to play catch-up with competitors. The iPhone 5S still delivers an 8 megapixel iSight camera, but the pixel sensors have been enlarged and the camera now delivers a much larger f/2.2 aperture. The new, larger sensor delivers 1.5μ pixels for better sensitivity and low-light performance – so Apple has taken a page from the HTC One playbook, which already does exactly this.

The A7 chip adds a new Apple-designed image signal processor that works in tandem with the new sensor technology. Apple has also designed a new five-element camera lens. These improvements are coupled with iOS 7’s new Camera app, which provides up to two-times faster auto-focus, faster photo capture, automatic image and video stabilization, and better dynamic range.

The iPhone 5S also delivers what Apple refers to as its new True Tone flash, which variably adjusts color and intensity for over 1,000 combinations; photos taken with a flash should appear more natural. We’ll see once the camera pros get their testing done here as to how real this is. There is also a new Burst Mode, Slo-Mo video with a rather amazing 120 fps capability, a new FaceTime HD camera for better low-light performance and audio-only FaceTime calls with iOS 7.

The iPhone 5S (and the iPhone 5C) makes use of a new Qualcomm chipset that supports up to 13 LTE wireless bands, more than any other smartphone in the world. This includes the critical China Mobile networks – and this is the game changer that will allow Apple to gain control of its Chinese markets. Dual-band 802.11 a/b/g/n Wi-Fi support for up to 150 Mbps and Bluetooth 4.0 are also supported. Apple claims 10 hours of talk time on 3G networks, up to 10 hours of web browsing on Wi-Fi and LTE networks and up to eight hours on 3G networks, up to 10 hours of video playback and up to 40 hours of audio playback.

The iPhone 5S is available in three metallic finishes: gold, silver and space gray. There is no longer a black option for the back of the device. Black and white are available as front covers. There are new cases as well, but we just don’t like talking about cases, so…

Suggested retail prices are the usual for Apple: $199 for the 16 GB model, $299 for the 32 GB model and $399 for the 64GB model. Yes, it is the usual price gouging on memory that costs but a tiny fraction of these $100 increments. The iPhone 5S will be available from the Apple Online Store, Apple’s retail stores, and through AT&T, Sprint, T-Mobile, Verizon Wireless and select Apple Authorized Resellers. Apple will also immediately have a large global presence with availability in Australia, Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico, Singapore and the U.K. beginning on Friday, Sept. 20.

The Rainbow iPhone 5C

As much as we’ve had to say about the iPhone 5S, we’ve got only a little to say about the new iPhone 5C. Why? Because for the most part it is a re-cased iPhone 5. It has the same screen and the same internals as the iPhone 5, including the A6 processor. It does of course sport the plastic – we mean polycarbonate - case that we’ve all long awaited. And it comes in five very iOS 7-friendly colors—blue, green, pink, yellow and white.

The only true difference between the old iPhone 5 and the 5C is that the 5C uses the same Qualcomm cellular chipset as the iPhone 5S – which means that it will support the same 13 LTE network types the 5S supports. It also means that, as with the 5S, it will support the China Mobile market – a very critical issue for both Apple and China Mobile. The 5C does boast all of the same wireless connection capabilities we provided above for the 5S.

The iPhone 5C case features an all-new design crafted from a single, hard-coated polycarbonate body with a steel reinforced frame – we can certainly anticipate the solid feel we must expect from an Apple device. The enclosure is one continuous and seamless structure that is finished with a hard coat that delivers a glossy surface. The steel structure also provides the antenna for the device. Yes, there are cases as well but we don’t cover cases so…

The iPhone 5C does also include a new FaceTime HD camera that should deliver excellent FaceTime calls and self-portraits. And since most of the features of iOS 7 are supported this means that the 5C will also support audio-only FaceTime calls.

The iPhone 5C will be available a week ahead of the iPhone 5S. In the U.S.. it will come with a suggested retail price of $99 for the 16 GB model and $199 for the 32 GB model. It will be available through all the same channels and global regions we’ve outlined for the iPhone 5S.

Innovation

Interestingly, we should also note that a new “true low end” iPhone 4S 8 GB model will also be made available for free. That sounds like old technology being dragged to the mud perhaps, but it will run iOS 7 and we believe there are likely to be a great many buyers for it. Never the less, this isn’t Apple’s future but merely a means to extending the market value of now old technology.

iOS 7 itself will be available as a free software update starting on Wednesday, Sept. 18 for iPhone 4 and later, iPad 2 and later, iPad mini and iPod touch (fifth generation). Some features will not be available on all products, and as we noted early on, it is the iPhone 5S that will deliver the true sense of innovation Apple has in fact put on the table with the new iPhone announcements.

For roughly the last nine months we’ve constantly harped on the need for Apple to deliver true, gimmick-free innovation. By this we mean innovation that will return the same Apple WOW factor that the original iPhone and the 4S delivered. Has Apple managed to pull it off?

We believe the company has. But let’s be clear – it is not the kind of WOW factor that will bring down the walls with instantly understandable WOW capabilities. It is a subtle innovation that delivers a truly seamless user interface, one that eliminates the “UI stutter” and one that, coupled with iOS 7’s own new and subtle visual cues will once again change the way we interact with and perceive our interactions with our devices. That is in fact real innovation, but it will only manifest itself once users put the iPhone 5S through its daily paces. You won’t be able to really discern these subtle user cues simply by “trying it out” in the store. If you are not convinced, simply wait for the grass roots reports to begin filtering in.

Finally, we absolutely believe that Apple has now placed the first cornerstones of its wearable tech foundation in place. We anticipate that Apple will begin to accelerate their rate of new product delivery as we head into 2014. Innovation requires a solid foundation, and for the wearable tech side of things we believe Apple is finally beginning to make its move. It is so much more sophisticated than what Samsung is doing with its Galaxy Gear (something we’ll examine on our wearable tech site later this week).

We do know one thing – our contracts are expired and we’ll be picking up several new iPhone 5S toys as soon as they hit the shops. With that, we’ll call it a wrap for our initial thoughts on the new iPhones.

Edited by Alisen Downey