Apple announced two phones to replace the iPhone 5, starting at a subsidized price of $99.
The tech giant rolled out the iPhone 5C and the iPhone 5S. The iPhone 5S features a fingerprint sensor that allows users to store information securely.
(Read more: Apple goes plastic and colorful with new iPhone line )
Apple's new smartphones will also come in new colors. The iPhone 5C, which has a plastic casing, will be available in bright colors including green, blue, pink and yellow. The iPhone 5S, which has an aluminum casing, will come in silver, gold and gray.
Subsidized pricing for the iPhone 5S will start at $199 for a 16GB, $299 for a 32GB and $399 for a 64GB. The iPhone 5C will cost $99 for a 16GB and $199 for a 32GB, with a two year contract. Both phones are available at Apple's retail store starting on September 20, which is also when the iPhone 5S becomes available for pre-order. However, pre-order for the iPhone 5C starts on Friday.
(Read more: Why 'device exhaustion' spells trouble for Apple )
2:11 P.M.: And Cook: Elvis Costello is here...
2:10 P.M.: "Before we close, I'd like to return to music for a moment," Cook said.
2:08 P.M.: "We've prepared a few ads, we want to show one..." Cook said. Shows a very colorful ad.
2:07 P.M.: NTT Docomo added in Japan... (Conspicuously absent is a China Mobile announcement).
Tim Cook is back on stage.
2:06 P.M.: The iPhone 5C pre-order on 9/13 ... purchase both 5C and 5S on 9/20. Both will launch in China at the same time.
2:05 P.M.: Pricing on 5S is the same as the 5 ... new colorful leather cases available. Schiller says the iPhone 4S at 8GB will stick around and be free.
2:03 P.M.: A user's fingerprint info is never stored in the cloud, or passed to the full iPhone system.
2:02 P.M.: "Your fingerprint is one of the best passwords in the world. It's always with you ..." said Dan Riccio.
2:00 P.M.: Touch ID is built deeply into iOS 7 ... usable for iTunes purchases too. (If Touch ID works, it has potential to be a killer app)
1:59 P.M.: Schiller says Touch ID sensor is in home button ... sensor knows when your finger is there without you having to press.
1:58 P.M.: Schiller says half of phone customers don't set up a passcode. Now, he introduces TouchID.
TouchID is a fingerprint sensor. Touch ID sensor, 170 microns thin, 500ppi resolution, 360-degree readability...
1:56 P.M.: Schiller is now talking about device security. Will he announce a fingerprint sensor?
1:53 P.M.: Schiller says there is reduced blur from multiple photos taken at once. The burst mode takes 10 frames per second; software chooses one it thinks is best but lets you pick if you want.
The Slo-Mo camera mode ... combine regular and slow motion in one shot ... 120 fps.
(Worth noting that many Android phones already have versions of these camera features.)
1:51 P.M.: Schiller says 5S camera comes with True Tone flash. Flash typically clashes with room lighting; white and amber flash combine for the right flash.
1:50 P.M.: The camera app also does autofocus matrix meter and takes multiple photos.
1:49 P.M.: Schiller says the new iOS 7 software is built to take advantage of the sensor. It has auto white balance, exposure, dynamic local tone map ...
1:48 P.M.: Schiller says iPhone 5S has 5-element lens, f2.2 aperture, 15 percent larger active area on the sensor ... 1.5 micron sensors. bigger pixel means there will be more light.
1:47 P.M.: More good news, the 5S battery life is equal or better than iPhone 5.
The new iPhone 5S also has a new camera system.
1:46 P.M.: Schiller says there is new collaboration with Nike for fitness app capabilities.
1:45 P.M.: Schiller says that new part, M7, a motion co-processor, works alongside A7 ... continuously measures motion data. This will also enable a new generation of health and fitness apps.
(Note: This is exactly the processor you'd want in a watch to enable low-power operation)
1:44 P.M.: These graphics are pretty incredible ... (Epic says they added 4x the detail to the dragon's spines).
Epic's claims are really interesting ... if true, could give Apple an edge in gaming performance again in mobile.
1:42 P.M.: Epic Games developers say load times are incredibly fast on A7.
1:40 P.M.: Donald Mustard from Epic Games: Showing Infinity Blade on 64-bit. The game was converted game to 64 bit in 2 hours.
1:39 P.M.: Schiller: A7 up to twice as fast ... at CPU and graphics
1:38 P.M.: Schiller says iOS 7 reengineered for 64-bit, so developers can make 32 & 64-bit apps (how much will developers have to tweak?)
1:37 P.M.: It has an A7: 64-bit, modern instruction set, over 1 billion transistors, 102 mm sq die size.
1:36 P.M.: Schiller gives details on performance. A7 SOC. 64-bit, first for a smartphone...
1:35 P.M.: Lined up, they're black, gold and white ... aluminum, diamond cut ...
Schiller says "It is the gold standard in smartphones."
1:34 P.M.: Schiller is now on the iPhone 5S. We're getting a look at the gold iPhone 5S.
1:33 P.M: Ive: "I think it's quite remarkable when something feels familiar and yet is new at the same time."
1:32 P.M.: Ive is saying the manufacturing process results in a "dense feel" that you wouldn't expect from plastic (which sounds a little apologetic).
1:31 P.M.: Ive is making an argument that the 5C doesn't feel like ordinary plastic.
1:30 P.M.: Now a video is showing, Ive in video calls the 5C the "distillation" of what people love about the iPhone 5. He says the 5C is "unapologetically plastic."
1:29 P.M.: The device will cost 16GB to start, priced at $99 and the 32GB 5C will be $199, both subsidized.
1:28 P.M.: Schiller says new FaceTime HD camera (sounds like this is an improvement) ... supports more LTE bands than any other phone.
There is no pricing yet, but this is not a low-end phone.
1:27 P.M.: Schiller says this is made of polycarbonate material ... steel reinforced structure, part of antenna system. It has an A6 chip inside 5C, battery slightly larger than iPhone 5 ... 8MP iSight (so far sounds just like iPhone 5).
1:26 P.M.: Schiller says custom cases of silicon rubber, microfiber-lined ... with circular cutouts.
1:25 P.M.: Schiller showing green, white, red, blue, yellow.
Schiller says volume buttons, switches, all same color ... no seams, part lines or joins.
1:24 P.M.: Schiller: It has an incredible all-new design ... "A few of you might have seen some shots on the web."
Showing a 5C video.,..
1:23 P.M.: In the past when we've announced a new iPhone we've lowered the price of the current iPhone ... this year we're going to replace ...Replace the iPhone 5 with two new designs.
Phil Schiller says Apple will replace iPhone with two new iPhones. First, 5C...
1:22 P.M.: Cook: iPhone 5 had the most successful first year of any iPhone we've ever done.
The iPhone 5 helped take our iPhone business to an entirely different level, he says.
1:21 P.M.: Cook says they're free with any new iOS device ... iOS 7 will let you download them all (new iPads, iPhones, 5th gen iPod touches).
"Now I'd like to talk about iPhone..." he says. "A couple of you may have been expecting this"
1:20 P.M.: Cook says there is no other platform that has any apps like these ... Apple is making iPhoto, all of iWork free.
1:19 P.M.: Cook making the case that Apple's apps are good for creating content.
1:18 P.M.: Cook is now talking iWork, saying they're the best-selling mobile productivity apps on any platform.
1:17 P.M.: Federighi says iOS 7 available September 18 and Tim Cook takes stage again.
1:16 P.M.: Federighi is now going back through iTunes Radio ... plugs Canadian rock band Rush (hmm).
Federighi says developers are coming out with new iOS 7-inspired app designs.
1:14 P.M.: Federighi shows "year view" in photos, Tim Cook stealthily starts a clap.
1:13 P.M.: Federighi says new ring tones. "You may miss a call due to your dancing ..."
Federigh says that the camera is better in iOS 7, new square aspect ratio camera (great for Instagram) ... photos grouped by moments.
1:12 P.M.: Federighi says Siri is massively improved in iOS 7. Siri can now search Twitter, Wikipedia and photo search.
1:11 P.M.: Federighi: iOS 7 can recommend where you need to go, traffic and weather conditions.
Federighi does a search for mousse, and a conversation pops up with someone complimenting his hair. Inside Apple joke...
1:10 P.M.: Now, Craig Federighi, Apple's SVP of spftware engineering, takes the stage.
Federighi says virtually overnight, hundreds of millions of people will download iOS 7. He is going over the basics of iOS 7 that we learned at WWDC in June.
1:09 P.M.: Cook says iOS will quickly become the world's most popular mobile OS (he must mean OS version).
1:08 P.M.: Cook says, "I would encourage you to drop by after today's event..." Of course you would, Tim.
Cook says next month we will ship the 700 millionth iOS device.
1:07 P.M.: At Stanford store, one room for product and another room for services.
1:06 P.M.: Also, retail: expanding footprint outside U.S., but this month attention turns home to U.S., Stanford Shopping Center; 5 million customers.
Shows new Stanford store (Cook visited there a few days ago and photos of him showed up on Twitter)
1:05 P.M.: (Lots of preparation, young hip kids outside, streaming into the venue screaming ... you can imagine...)
Interesting experiment in staging live television from Apple, right?
1:04 P.M.: Cook says that 100 countries got the live stream. Eddy's team prepared a simple and elegant app, so people could see it ... we prepared a video (which we'll now see)
1:03 P.M.: "It's great to see everyone. Thanks very much for joining us." Cook gives a shout out to Beijing, Berlin and Tokyo. Now for updates.
First, iTunes Festival. 7th year. This year was the best, he says. 30 nights in London, including Elton John, Gaga, Timberlake.
"Despite it being the hottest ticket in London, we don't charge anything to get in ... 20 million people applied for tickets," he said.
1:02 P.M.: Tim Cook has taken the stage.
1:00 P.M.: Lights have gone dim.
12:58 P.M.: The Apple event will begin in a few minutes. They've asked us to set phones to silent.
Apple is expected to debut its next-generation iPhone at its Cupertino event today, but that may not be all the company reveals.
(Read more: Why 'device exhaustion' spells trouble for Apple )
The iPhone 5S is likely to be revealed and may possibly be available in a new color, possibly a champagne tone. It's also speculated that the device may have a biometric sensor that can read a user's fingerprint.
Other expected announcements may include a roll out of an updated full-size iPad and iPad mini.
However, iPad updates may not occur until later this year. Software updates for Apple TV may also be in store, according to some reports.
There's also been some speculation that Apple may announce it's opening the TV platform up to developers; however, this may not come until next year.
The event begins at 1 P.M. ET and CNBC will be live blogging the event. Be sure to follow us here for all the latest updates.
—By CNBC's Cadie Thompson. Follow her on Twitter @CadieThompson.