Apple sticks with tried and true — for now
Tech giant tweaks bestselling gadgets with redesign, upgrades
Apple didn’t produce a groundbreaking product Wednesday, as expected. But the world’s most-valuable company is building the groundwork for its next big chapter.
The corporate icon played it safe with serviceable upgrades to iPhone and Apple Watch that not only are sure to satiate its fanboys but build a technological bridge to the next era of Big Things in cars, augmented reality and artificial intelligence.
That’s a few years away, a veritable lifetime in the blur-fast pace of Silicon Valley. But for a company known for its bold, unbridled ways under the late Steve Jobs, it seems the wise, sensible course for one now valued at $580 billion.
Critics have bemoaned a wow factor missing from recent Apple events and — in a nod to them — it delivered several mini-wows: a faster, water-resistant iPhone 7; wireless ear buds called, appropriately, Air Pods; a better iPhone camera; and bringing Pokemon Go to Apple Watch Series 2. It announced partnerships with Nintendo, Niantic and Instagram.
Still, the bread-and-butter of
the two-hour presentation here, buried amid the gadget news, were updates to products under the fast-growing services division, whose revenue surged 19%, to $6 billion, in the June quarter to become Apple’s second-biggest business segment, after iPhone.
Apple Music, started just more than a year ago, is up to 17 million paid subscribers. More than 140 billion apps have been downloaded from the App Store, whose “phenomenal” growth is up 106% in July and August from a year ago, Apple CEO Tim Cook said.
“By itself (services) could top a Fortune 200 company,” says Tim Bajarin, principal analyst at market researcher Creative Strategies.
Under Cook, Apple is an entirely different beast than the one under Steve Jobs: It’s much larger, less prone to risk and has more at stake. Sitting on more than $200 billion in cash, it is betting on the near-future by snapping up startups in the AI and machine learning fields.
Apple is a technology giant in transition. Sales of its cash cow, iPhone, have declined two straight quarters in a cooling smartphone market, while it cultivates its thriving services division — ranging from Apple Music subscriptions, App Store purchases and iCloud storage.
Apple needs to shift its emphasis to software because it provides the kind of consistent, year-to-year revenue not always guaranteed by iPhone, especially as more consumers hold onto their smartphones longer before upgrading, says Bill Kreher, an analyst at market researcher Edward Jones.
Like many analysts, Angelo Zino, of S&P Global Market Intelligence, calls iPhone 7 “more evolutionary than revolutionary” and expects “relatively flat volume” compared with the iPhone 6S/6S Plus cycle. He anticipates declines in iPhone shipments in the September (45 million, down 6%) and December (70 million to 72 million, down 5%) quarters, according to Zino.
Zino, echoing his analyst brethren, predicts a spike in sales when iPhone 8, the 10th-anniversary edition of the behemoth smartphone franchise, debuts as expected next year.