Apple CEO Tim Cook speaks in front of an image of an iPhone 4S at Apple headquarters in Cupertino, California October 4, 2011. [Photo/Agencies]

Intensifying competition

On a brighter note, the company would seem to be making inroads into potentially pivotal new markets.

It said more than 90 percent of Fortune 500 companies are testing or using its iPhones and iPads, expanding its presence in a corporate market dominated by RIM. RIM shares trading on the Nasdaq stock market slid nearly 3 percent before ending 2.4 percent higher. Google shares finished 1.3 percent up.

The two-generation-old iPhone 3GS will be offered free, as long as users sign a contract. Analysts said that would help to expand its market in lower-end Asian and developing markets.

"Apple is hitting Nokia when it's vulnerable. How many billions of people in emerging markets would love to have an iPhone? These are a growing demographic," said YCMNet Advisors CEO Michael Yoshikami.

Tuesday's iPhone event took place at Apple Central -- the same venue where the iPod first was introduced years ago -- versus the larger, splashier venues of more recent choice such as downtown San Francisco's Moscone center.

Heading in to the event, many on Wall Street had questioned Cook's ability lead the company as Jobs did. In terms of stage presence, Jobs was a tough act to follow, but analysts say Cook acquitted himself well.

Twitter users were not impressed with the phone, though.

"Please note I will be selling some 'S' stickers for $0.99 so iPhone 4 owners have a cheaper upgrade option," wrote HAL9000 on Twitter.

Tomlinsonr tweeted, "I'll have a double helping of 'meh' with a side of 'whatever'."

The latest version of the iPhone comes as the economy slows and competition intensifies. People activate more than 550,000 Android-based devices -- including tablets -- each day.

Nielsen data shows the iPhone was No. 2 in the United States with a 28 percent market share, with Android at 43 percent.

Globally, iPhone shipments rose 9.1 percent in the second quarter while Nokia's plummeted more than 30 percent, handing the top spot to Apple with a market share of 18.4 percent, according to IHS iSuppli. Samsung, whose shipments grew faster, is coming on strong with a market share of 17.8 percent.

Despite disappointment online, analysts said the phone is superior to many rival offerings.

"Voice recognition has been on Google and Blackberry devices for years, but Apple will make it much more usable," said Morgan Keegan analyst Tavis McCourt.