Apple hopes to regain stride with iPad, Apple TV updates
Tech giant faces pressure as declining growth in China could hurt company’s sales
When Apple Inc. CEO Tim Cook takes the stage in San Francisco Wednesday, he’s expected to unveil improved iPhones and a revamped Apple TV in the company’s annual hardware update. But this year’s event is anything but typical. Unlike last September, when Cook debuted bigscreen iPhones that spurred record sales, global economies today are feeling the pain of a China-led slowdown that has raised questions about Apple’s ambitions in Asia.
Shares in the Cupertino-Calif.-based giant gave back most of the year’s 21-per-cent gain during a late-August global markets meltdown. Analysts pointed out that declining Chinese growth could hit spending on goods such as iPhones.
Apple is also facing tough competition in new product areas including wearable computers, music streaming and mobile payments as it seeks to leverage its iPhone customer base and diversify sales that are increasingly dependant on the iconic device.
Against this backdrop, the Sept. 9 event has taken on wider relevance, playing out against the macroeconomic worries and shifting investor sentiment on Apple shares.
“We view this as critical for Apple to help turn the negative investor tide and lay out its growth vision for the next year,” said FBR analyst Dan Ives.
Apple, in its third-quarter earnings report in July, posted iPhone sales just below forecasts and said iPad shipments dropped 18 per cent year over year as mature markets approach saturation.
The company has been banking on China to pick up the slack and drive sales of the iPhone, which now accounts for nearly two-thirds of Apple’s revenue.
Annual GDP growth in China, however, has slowed to less than 7 per cent after decades of double-digit expansion, leading to a currency devaluation that has triggered a sell-off in Chinese equities.
Cook moved in late August to quell disquiet over China amid the market turmoil, emailing CNBC to assert accelerating sales for the iPhone 6 and iPhone 6 Plus and App Store in mainland China in July and August.
Despite the assurance, analysts at Cowen said in a note that “evidence of a widespread demand reset from China is mounting.”
The note cited drops in China business reported by bellwether U.S. firms including construction equipment maker Caterpillar and defence contractor United Technologies.
Apple, meanwhile, is not commenting on Wednesday’s event after it sent invitations to media under the banner “Hey Siri, give us a hint.”
Rumours suggest it will reveal a fourth-generation TV set-top box that adds Siri capabilities, motion sensors for gaming and a dedicated App Store — at a price more than double its $69 (U.S.) predecessor.
Some analysts say Apple lags rivals such as Roku, Google’s Chromecast and Amazon’s Fire TV in the interactive TV market, where it has not made significant improvements to its device since 2012.
Upgrades to the iPhone 6 including a display feature allowing different actions by light tap or deep press are also expected.
There may be an update of the iPad Mini 4 and debut of the long anticipated 12.9-inch iPad Pro aimed at enterprise.
The iPad Pro likely won’t ship until fall, but could be unveiled to give developers time to create new apps for the device.
Apple announced a partnership Monday with Cisco aimed at bring- ing more phones and tablets to socalled prosumers amid weakness in consumer tablet sales.
FBR’s Ives expects Cook will introduce the iPhone 6S and iPhone 6S Plus, which upgrades the processor and camera of the iPhone 6 and iPhone 6 Plus while keeping the same dimensions and basic design. He said the new models would come equipped with Force Touch, which will enable developers to design new features that can be unlocked depending on how forcefully the user presses down.
Apple has also reportedly been working on a new four-inch iPhone with the capabilities of the iPhone 6 and a lower price, although blog site 9to5Mac said the device is not yet ready to ship. It said Apple plans to discontinue the iPhone 5c after the 6S and 6S Plus go on sale.
The company is also likely to introduce Apple Watch sports bands in new colours, but analysts will be looking for any comment on sales of the device — the first new product category since the death of Apple co-founder Steve Jobs in 2011.
Some analysts have said Apple lags behind its rivals in the interactive TV market, where it hasn’t made significant device improvements since 2012