Apple's iPhone 5C smartphones, on sale in an Apple store in Berlin, Germany.
Apple Inc. tweaked the lineup for its entry-level iPhone and iPad at a time when rival offerings running Google Inc.'s Android operating system are gaining momentum for the most price-sensitive consumers.
The company refreshed its least expensive 9.7-inch tablet, swapping out the 2011 iPad 2 model for a more recent version with a more powerful processor, faster wireless connectivity, and a sharper display. It kept the price unchanged at $399 for the Wi-Fi version and $529 for the Wi-Fi and cellular model.
It also introduced a less expensive version of its iPhone 5C, the low-end version of its smartphone, with 8 gigabytes of memory—half the amount of its previous, cheapest model. The new phone is available on Tuesday in the U.K., France, Germany, Australia and China. It won't be introduced in the U.S.
In China, the new iPhone 5C will sell for 4,088 yuan ($660) without a contract versus 4,488 yuan ($725) for the 16-gigabyte model. In the U.K., the cheapest model will sell for 429 pounds ($711) versus 469 pounds ($778) for the 16-gigabyte iPhone 5C without a contract.
The new products are hitting the market as competitors are chipping away at Apple's market share from the low-end, especially with smartphones. For example, a large percentage of China's smartphones sell for less than $200—making even the company's entry-level 5C more expensive than most phones on the market.
Android's market share for smartphones reached 79% in 2013, up from 69% a year earlier, according to research from International Data Corp. By comparison, Apple's share of the market fell to 15.2% in 2013 from 18.7%.
Apple is also seeking to breathe new life into the 5C, which represented a tweak to its iPhone strategy. In the past, Apple had targeted more price-sensitive consumers by offering its previous generation iPhone at a $100 discount. This time, it offered the 5C, ostensibly a new model but essentially the same hardware as the previous-generation iPhone 5 with a plastic case that comes in five different colors.
While Apple doesn't break out sales for different models, analysts pointed to the 5C as the culprit for why iPhone sales came up short of expectations in the quarter ended December. According to analytics firm Mixpanel, the high-end iPhone 5S accounts for three times more traffic on iPhone apps compared with the 5C. That doesn't necessarily mean that the 5S has outsold the 5C by 3-to-1, but it does suggest that there are significantly more 5S models in the market.
Apple is also updating the iPad as growth in tablet sales is expected to slow. IDC earlier this month reduced its 2014 forecast for global tablet shipments, expecting growth of 19% in 2014 to 260.9 million units world-wide, down from 52% in 2013. Consumer purchases are predicted to slow, IDC said, as fewer users are feeling compelled to upgrade the same way they did in the past.
Apple's iOS operating system had dominated the tablet market for years, but it was overtaken in 2013 by Google's Android system. Apple's iOS made up 36% of world-wide tablet sales last year, according to Gartner Inc., compared with a 62% market share held by Android.
In January, Apple said it sold 26 million iPads in its latest quarter, its most ever, compared with 22.9 million in the year-ago period.
Write to Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com and Ben Fox Rubin at ben.rubin@wsj.com
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