The device also includes a new technology, wideband audio, that's intended to make voice calls sound more natural.
And the new phone gets a new OS, iOS 6. It has better mapping, with turn-by-turn directions and sharper satellite imagery. The Safari browser will have full-screen mode, among many other improvements.
An upgraded camera has an 8-megapixel sensor with a five-element lens and a faster f/2.4 aperture, which should give better low-light photography. A "sapphire" cover protects the lens and gives sharper pictures.
The new iPhone adds 1080p video with better image stabilization and the ability to capture stills while recording video.
The iPhone 5 also betters the battery life of the iPhone 4S, according to Schiller, with eight hours of 3G or LTE talk time or browsing and 10 hours of Wi-Fi browsing.
It also has better Wi-Fi, according to Schiller, including dual channel 5GHz 802.11n that gives bandwidth up to 150M bps.
The phone has a single baseband chip for voice and data, and a single radio chip, all of which helps reduce its size and weight.
Twenty carriers will support the new phone at launch, including Orange and Deutsche Telekom. Apple is working with AT&T, Verizon and Sprint to offer service in the U.S., and with other providers in Asia, Australia, the U.K. and Germany.
Apple is also expected to announce new iPad's as the Wednesday event progresses.
The iPhone 5 launch comes as Apple fights to recover its dominance in the smartphone sector. Rival Samsung shipped nearly twice as many smartphones as Apple in the second quarter, as Apple buyers held off making purchases pending today's launch, according to iSuppli in July.
Apple won a massive patent infringement court case against Samsung in the U.S. in August. Samsung must pay Apple around $1 billion in damages and make changes to some of its phones in order to keep selling them in the U.S.
(Jason Snell and Dan Moren of Macworld contributed to this report)
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