Apple will kick off a blitz of new products this week, ending a year of minor updates and setting the technology giant up for a potentially strong holiday quarter.
Through the rest of 2018, the world’s most valuable public company will launch three new iPhones, revamped iPad Pros, Apple Watches with larger screens, a new entry-level laptop with a sharper screen, a pro-focused Mac mini desktop computer and new accessories like the AirPower wireless charger.
The product launches will begin on Wednesday in the Steve Jobs Theater at the company’s Apple Park headquarters in Cupertino, California. The focus will be on Apple’s latest iPhones. It’s still the company’s most-important product, generating about two-thirds of revenue and spurring purchases of other Apple devices, along with services like app subscriptions, movie downloads, and iCloud storage. While smartphone market growth has slowed, higher prices have helped Apple keep expanding and it has gained market share.
Looming over Wednesday’s event will be tariffs imposed on products from China by US President Donald Trump. Apple warned last week that this will raise prices for some of its popular offerings like the Watch and AirPods. Trump on Saturday urged the company to return its manufacturing to the US. Apple shares declined 1 percent to $219.11 at 11:50am in New York.
There will be a trio of new smartphone models that look and act like the iPhone X from last year:
An upgraded version of the iPhone X with a 5.8-inch screen, but adding a faster processor and upgraded cameras. This device is likely to be called the iPhone Xs, which would follow Apple’s naming approach for new iPhones that look like the previous models but add new bells and whistles. It’ll also come in gold, adding to the gray and silver versions from last year. A larger version of last year’s iPhone X with a nearly 6.5-inch screen. That would make it one of the largest mass-market phones ever sold and about an inch larger than the screen on the iPhone 8 Plus. To signify the even larger screen, Apple is likely to give the phone a new name: “iPhone Xs Max,” according to people familiar with Apple’s internal deliberations. The third phone, a new low-cost version of the iPhone X, could be the hit of the product roll out. It’ll have a roughly 6.1-inch screen with LCD instead of newer OLED technology. It will also use aluminium instead of stainless steel edges, and come in several additional colours. Apple has considered calling the phone the “iPhone Xr,” one of the people said.
The phones may raise the iPhone average sales price, boosting revenue and profit, while expanding the total number of active Apple devices to support sales of accessories and digital services. Still, none of the phones will feature breakthrough new features, with more significant changes planned for next year, the people said.
The consensus expectation is that the new LCD iPhone will be priced between $699 and $749, Goldman Sachs analyst Rod Hall wrote Friday in a note to investors. Hall, however, believes Apple will price it closer to $849 given better-than-expected demand for the current iPhone X this summer. A $699 version is unlikely and wouldn’t be good for earnings, Hall added. The iPhone 8, which the new lower-cost iPhone X-like model is expected to replace in the line up, starts at $699 or $799 depending on screen size.
Morgan Stanley analyst Katy Huberty is positive on Apple ahead of the iPhone launches. She thinks that iPhone unit growth may surprise investors to the upside in Apple’s 2019 fiscal year. Lately, unit growth has been running at about 1 percent.
Last year, Apple put the iPhone X on sale in early November, almost two months after it was unveiled. This year, the new models will likely be available for purchase much closer to their announcement date. That gives the company more time to scoop up sales during the U.S. Thanksgiving and holiday shopping frenzies.
Still, Apple has faced tight supply of the new low-cost model due to minor complications fitting backlights for the LCD screen, according to people familiar with the matter. That could mean the lower-cost device ships in limited quantities initially, they said. Apple may be tempted to delay availability of the LCD version to gauge demand for the more expensive largest new iPhone, Goldman’s Hall said.
While the iPhones will be the Wednesday’s main attraction, Apple’s growing smartwatch business will see stage time, too. The company plans to introduce new Apple Watches with larger screens that go nearly edge-to-edge, showing the user more information. The upgrades will mark the most-significant changes to the Apple Watch since the product was launched in 2014.
Apple had 17 percent of the smartwatch market in the second quarter of 2018 with 4.7 million units shipped, beating out second place Xiaomi by half a million units and Fitbit by 2 million, according to data from IDC. The Apple Watch saw more than 38 percent year-over-year growth, according to IDC, and a larger model could boost the device’s prospects heading into the holiday season.
While it is the market leader, the Apple Watch still doesn’t sell in high enough quantities for Apple to break out individual unit sales like it does for Macs, iPads, and iPhones. However, the product has buoyed revenue from Apple’s “Other Products” segment, which also includes the Apple TV, HomePod, and AirPods.
Beyond phones and watches, Apple is planning a series of other products later this year. Not all of them will be revealed on Wednesday:
AirPower Wireless Charger: This is Apple’s charging pad that can simultaneously charge an iPhone, Apple Watch, and AirPods without plugging them in. The company faced development challenges, but plans to launch it as soon as this month, Bloomberg News reported earlier this year. New MacBook: The company is preparing a new lower-cost laptop with a 13-inch Retina display to succeed the MacBook Air. Geared toward consumers and schools, the laptop may help Apple re-gain lost market share in the PC world. Revamped iPad Pros: Apple is planning two new iPad Pros for this year with slimmer bezels and Face ID instead of the home button and fingerprint sensor. These will be some of the most significant upgrades to the iPad in the device’s history. They’ll come in 11-inch and 12.9-inch sizes, and could give Apple a boost in the slowing tablet market. Pro-Focused Mac mini: For the first time in more than four years, Apple is getting ready to update its Mac mini computer, a desktop that doesn’t come with a screen, mouse, or keyboard. This time around it will focus on graphic designers and other professional users, who have been asking for new Macs that meet their more-demanding needs.
© 2018 Bloomberg LP
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