DUBLIN – For the first time, South Africans will be able to get their hands on the new Apple iPhone line just one week after their peers in the USA. The new iPhones will be available in South Africa from September 28. The new line-up features Apple’s biggest and priciest phones yet, with the iPhone Xs Max clocking in at over 16.5cm and a giddy $1,099. There’s a more-affordable version of the X, the XR, which is a little smaller and features an LCD screen instead of an OLED – that one will retail for $749. Apple also announced an impressive new version of the Apple Watch, which will feature an electrocardiogram, to better measure your heart rate. Of course, the question for investors is whether the new line of products will be enough to keep Apple growing. Smartphone sales have been slowing worldwide as people upgrade their devices less frequently. Although the big new screens could encourage people to use more apps – giving Apple more app revenue – there’s no guarantee that the new line has done enough to keep the punters coming back. – Felicity Duncan
Apple Launches Bigger, Pricier iPhones
By Tripp Mickle
(The Wall Street Journal) CUPERTINO, Calif.— Apple Inc. on Wednesday unveiled its biggest and most expensive iPhone line-up ever, making a bet that larger screens can persuade millions of iPhone owners to not only upgrade to a new device but also fork over more money than they spent in past years.
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A year removed from the 10th anniversary of a product that turned it into the world’s most valuable company, Apple sought to enliven its flagship device with standard improvements like speedier processors and longer-lasting batteries while also touting innovative features like photo-editing tools and new haptic-touch technology.
Apple also unveiled a new smartwatch with an edge-to-edge screen that is 30% larger than previous models, along with sensors that could help elbow Apple into the cardiac-monitoring market. The Apple Watch Series 4 comes with an electrical sensor that gives the device electrocardiogram, or ECG, capabilities to measure a heart’s electrical current in 30 seconds. It is the first of the company’s smartwatches to win Food and Drug Administration clearance, showing the notoriously secretive company is willing to work with regulators as it pushes into the health industry.
Inside the Steve Jobs Theater at Apple’s $5 billion new campus, CEO Tim Cook and other executives kept the focus solely on the smartwatch and the iPhone, rather than introduce new versions of Mac computers, iPads or AirPod wireless headphones.
The star remained the iPhone, which accounts for about two-thirds of total revenue and remains the company’s most important product.
Apple’s highest-priced phone is now the iPhone XS Max, priced at $1,099, a plus-size, 6.5-inch version of last year’s anniversary model. The iPhone XS, priced at $999, costs the same as last year’s iPhone X and features the same 5.8-inch OLED display. And the new iPhone XR is a 6.1-inch device with an edge-to-edge LCD display priced at $749, splitting the difference between last year’s iPhone 8 and iPhone 8 Plus prices.
The new models are critical to maintaining sales in a contracting smartphone market where people hold on to devices longer, and growth of high-price handsets has stagnated.
Those challenges have clouded Apple’s future. Though it became the first U.S. company to be valued at more than $1 trillion last month, tech rival Amazon.com Inc. more recently hit that milestone and is threatening to unseat the iPhone maker as the world’s most valuable company.
To maintain its corporate perch, Apple must squeeze more money out of its existing customers. An estimated 254 million consumers use iPhones that are more than three years old and 486 million use iPhones that are more than two years old, according to Piper Jaffray, an asset-management firm.
Apple is betting it can persuade enough customers to buy a new device to improve on the 17% increase in iPhone revenue to $164.66 billion that analysts predict it will deliver in the fiscal year ending in September, as the iPhone X’s nearly $1,000 price tag offset flat unit sales.
It also is banking on them paying more. The new iPhones have an average selling price of $949, 15% higher than the three phones launched a year ago.
“It will be hard to beat, but they are throwing more at it with a big display increase that will raise the sexiness of the best phone they offer,” said Patrick Moorhead, president of the technology research firm Moor Insights & Strategy.
When Apple last introduced a major increase in display size with the iPhone 6 Plus in 2014, annual sales of the device the subsequent fiscal year soared 52% to $155.04 billion and shipments spiked 37% to 231 million units. Few expect it to repeat that feat this year.
Apple is working harder than ever to generate unit sales comparable to its peak in fiscal 2015. The company last year shipped an estimated 151 million units of its three flagship models, flat with the two flagship models it shipped in fiscal 2015, according to Strategy Analytics, a technology research firm. Meanwhile, the complexity of making three models has reduced its iPhone operating margins to 30% this year from about 35% in 2015, the firm said.
“Apple is having to run harder just to stand still,” said Neil Mawston of Strategy Analytics. “It’s the classic sign of maturity.”
Apple is aiming to offset stagnant unit sales of iPhones with rising revenue from a fast-growing services business that includes app-store sales, streaming-music subscriptions and mobile payments. The services business jumped 26% to $27.2 billion over Apple’s first three fiscal quarters through June.
The bigger screens are expected to help that business line, as smartphone users with 6-inch screens or larger typically use twice as many apps as those with 5.5-inch screens and are twice as likely to watch video daily, according to Kantar Worldpanel.
Though bigger phones could drive more app sales and other revenue across iPhones, they could also risk triggering concerns about excessive smartphone use. After receiving a letter in January from investors urging the company to address a potential health crisis due to youth-smartphone addiction, Apple this month will make available to all iPhone users new software tools announced in June to let them monitor usage.
“There’s a paradox here,” said Kevin Holesh, a founder of the app Moment, which helps people track device usage. “These big tech companies want people to be engaged with their device but are realizing the long term detriment of device overuse.”
The other growth areas for the company are its so-called wearables, which include smartwatches and wireless headphones. They are the primary contributors to a business unit that has jumped 37% to $13.18 billion in the first three fiscal quarters through June.
The Apple Watch Series 4, starting at $399, could move into the cardiac-monitoring market, valued at $1.4 billion, according to iRhythm Technologies, Inc., which has an ECG product. The functions Apple touted would reach a small percentage of that market, said Gene Mannheimer, an analyst at Dougherty & Co. who focuses on digital health. However, he said it could help expand the market by bringing in some 15 million adults over 65 who have irregular heartbeats and don’t know it—a group that could equal $5.25 million in smartwatch sales.
“I don’t see this as a game changer for them,” he said.
Write to Tripp Mickle at [email protected]
