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New iPhone faces mounting competition

(MoneyWatch) When Apple unveiled the newest iPhones last week, the company did something it had never done before: It took the wraps off not one, but two new handsets -- the iPhone 5s and iPhone 5c. That's not the only thing that was different this time around. Unlike previous iPhone releases, this one saw the iPhone as the underdog, second in market share to the Android platform.

Apple isn't used to being second place in the mobile marketplace, but it's probably a position it should get used to. CNN reports that Android has 79 percent of the market, and Apple is a distant second at 14 percent.

How has Apple come to find itself in this pickle? Recently, former CBS MoneyWatch contributor Rick Broida and I discussed the appeal of the new iPhones compared to Android devices, and the iPhone didn't come out definitively on top.

The new iPhone 5s has a small set of features that push it to the top of the pack, but none of these features are a clear win:

  • The new 64-bit processor positions the iPhone platform for faster and better apps, but no one is likely to see the benefits of this anytime soon. It's a long play.
  • The fingerprint reader, known as Touch ID, is a definitively sexy and powerful feature, but its value is muddied by concerns about security and privacy. Even here at CBS MoneyWatch, commenters have expressed doubt that Apple can keep the National Security Agency from acquiring your biometric data.
  • An improved camera lets users capture 120fps -- true slow-motion video. That's an impressive achievement and looks great. But is it just a gimmick, and can users even see the value? Broida, for example, equated this with software-only slow motion apps that create poor imitations. It's clearly better, but not all users can make the distinction.

In contrast, Apple is competing with Android, which has the benefit of multiple vendors creating a variety of handsets, allowing for significantly greater innovation. And there are Android handsets giving customers specific features that some Apple users have been clamoring for, like larger screens, better battery life, replaceable batteries and expandable memory via memory card slots.

Photo courtesy of Apple