MARKETS’ TAKE ON NEW IPHONE: MEH
STOCK PRICE MOSTLY FLAT AFTER LATEST PHONES UNVEILED IN CALIFORNIA
SAN FRANCISCO • Apple Inc. is hoping that significant and somewhat controversial internal changes to its iPhone lineup will be enough to reverse a recent slump in sales.
The tech giant unveiled two new smartphones Wednesday during its annual fall iPhone event at the Bill Graham Civic Auditorium in San Francisco.
The smartphones, called the iPhone 7 and the iPhone 7 Plus, include enhanced cameras and processing power, water and dirt resistant capabilities, a jet black look and a redesigned home button.
But it is what isn’t there that is garnering the most attention.
In a controversial and much anticipated move, the headphone jack has been removed to free up space internally for other things such as another speaker to provide stereo audio.
“Our smartphones are packed with technology where we want more … and it is all fighting for space in that enclosure,” said Phil Schiller, Apple’s senior vice president of worldwide marketing, from the stage.
Consumers will now have to use headphones designed to work with the existing lightning port or an adapter that will allow old headphones to exist. There will also be AirPod wireless headphones developed by Apple coming in October.
“Our team at Apple has worked hard to deal with the challenges that have been left there and no one has taken on,” Schiller said about wireless audio technology and the need for innovation in the space.
While Apple executives called the move “courageous,” there has been strong criticism from customers reluctant to use an adapter for their existing headphones, especially when some have spent hundreds of dollars on them.
Wednesday’s rollout, with its mostly internal changes, marks the first time Apple has stepped away from its strategy of conducting major design overhaul every two years.
The purpose of the change in timing was to fall in line with carrier contracts — particularly in the U.S .— but as carriers begin to abandon the two- year contract and opting f or monthly payment options, Apple is reacting by focusing on internal changes this year to drive revenue.
Apple has seen slumping iPhone sales for the last two quarters, which played a role in ending the company’s 13- year streak of quarterly revenue growth. In April, the company said iPhone sales were down 16.3 per cent for the quarter to slightly more than 51- million units. iPhone sales also fell 15 per cent last quarter to more than 40 million units.
“What folks really lose perspective on is Apple is targeting a middle classand- up category,” said Julie Ask, a vice- president and principal analyst at Forrester Research who attended the event.
“We are at more than 70 or 75 per cent ownership in the United States and Canada, so when you are reaching a point of saturation you can’t expect the same kind of growth rates historically.”
Aside from the usual processing power bump, both the iPhone 7 and iPhone 7 Plus will have Retina HD screens for better colours and a redesigned home button which isn’t actually a button but relies on haptic feedback to feel like it is be- ing pressed. The iPhone 7 will have a single 12- megapixel camera, while the Plus has two side- by- side lenses that will allow for zooming into a scene without losing picture quality and better depth of field.
“It’s very obvious Apple doesn’t want to win the race to the bottom, so they don’t need to be in the category of selling $ 50 smartphones,” said Ask.
“They are sticking to their guns around how they think about consumer privacy, data, and products. The quality of the experience is of the upmost importance to them and they seem to be sticking true to their values.”
Also announced at the event was an upgraded Apple Watch line, which hasn’t seen a new iteration since its debut in April 2015. Called Apple Watch Series 2, the device’s upgrades are aimed at the fitness crowd, with a built- in GPS so users can run without an iPhone and water resistance up to 50- metres for swimmers. Prices for the new models start at $359, available Sept. 16.
Apple is also expanding partnerships with the Watch as it increases it reach to the fitness and luxury markets. Announced Wednesday was the Apple Watch Nike+, which will include exclusive Siri commands, new designs and better compatibility with Nike’s Nike+ Run Club app. Meanwhile high- end retailer Hermès is releasing a line of Apple Watch accessories that include new styles and colours.
The biggest surprise of the event came during its software portion, when Nintendo’s Shigeru Miyamoto appeared to announce a mobile game called Super Mario Run, which will be coming to Apple’s iOS first later this year. Nintendo’s s hares jumped more than 20 per cent on the news.
Niantic CEO John Hanke also appeared and said the Apple Watch would be getting a Pokemon Go app as well, adding that the popular a pp has been downloaded more than 500- million times.
The new line will start at $ 899 with pre- orders beginning Friday.
On Wall Street, Apple’s shares were flat following all of Wednesday’ s announcements, increasing less than one per cent at close.