Apple CEO Tim Cook said the iPhone 4S features a dual-core A5 processor, an eight-megapixel camera, 1080p HD resolution video recording and Siri - a virtual personal assistant with voice searching. The updated iOS contains over 200 new features.
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The iCloud allows iPhone, iPad, iPod touch, Mac or PC devices to wirelessly store content in Apple's cloud.
Philip Schiller, Apple's senior vice-president of worldwide product marketing, said: "While our competitors try to imitate iPhone with a checklist of features, only iPhone can deliver these breakthrough innovations that work seamlessly together."
Apple's iOS 5 mobile OS integrates Twitter. iMessage allows SMS, photos and videos to be sent more easily between iOS 5 users. The update will be made available as a free software update for iPhone 4 and iPhone 3GS users and will be available to download via iTunes 10.5 on 12 October.
The OS also features an updated software development kit (SDK) with over 1,500 new APIs and developer tools.
Apple also said the iPhone 4S can switch between two antennas as part of the dual-antenna design.
The iPhone 4S will be priced at $199 (16GB), $299 (32GB) and $399 (64GB). The devices will be available in the UK from 14 October 2011.