Apple Bets More Cameras Can Keep iPhone Humming
Apple
Bets More Cameras Can Keep iPhone Humming
Trio of smartphones is
expected alongside a new smartwatch and subscription services designed to
diversify Apple’s business
Apple Inc.’s iPhone is
expected to remain the star of the company’s annual publicity showcase this
week, as it has been for the past dozen years. But the spotlight is turning
toward a younger cast of products that Apple needs to galvanize growth.
On Tuesday, Apple plans to reveal a trio of new iPhones with
additional rear cameras and enhanced capabilities for low-light photos,
according to people familiar with the plans. Analysts expect the
phones to also feature faster processors, new exterior colors such as green and
purple, and wireless charging for other devices such as AirPods wireless
earbuds.
The expected updates aren’t exactly
inspiring Wall Street, with some analysts and investors predicting
the forthcoming iPhones will be boring. With sales of its long-in-the-tooth
phones flagging, Apple is beefing up its portfolio of connected,
high-price products, including the Apple Watch, AirPods and subscription
services for TV shows and videogames.
“They’re treading water now, just trying to keep the iPhone
afloat,” said Dan Morgan, a senior portfolio manager who focuses on tech at
Synovus Trust Co., which counts Apple among its largest holdings. He is
optimistic that this year’s phones will have enough new features “to put extra
legs on a very mature product and keep the train going.”
The just-enough attitude speaks to the challenge confronting
Apple since the release of its first iPhone in 2007. The iPhone
contributes more than half of Apple’s total sales, putting the company in the
awkward position of sustaining a core product while needing to become less
dependent on it.
Recent iPhone advances such as facial-recognition technology
haven’t resonated with some customers, who tend to view Apple’s products as
less unique and its brand as less aspirational than in years past, according to
UBS’s annual global survey of 8,000 smartphone customers released in May.
Many people are holding on to their devices longer and aren’t compelled to
upgrade to new iPhones that have an average price of $949.
The company needs to sell enough iPhones
over the next year to avoid a repeat of the disappointing results that dogged
it after the release of the XR and XS models last September. Weak sales of
those devices forced the company in January to slash guidance for the first time in more than 15 years.
Apple is forecast to sell about 70 million units of the new
iPhones before the end of the year—nearly 30% fewer than its peak of 98 million
units of its newest models in 2014, according to trading firm Susquehanna
International Group.
The modest projections for 2019 have investors looking ahead to
2020, when Apple is expected to release its first iPhone with 5G, a fifth
generation of cellular networking that is supposed to improve wireless speeds.
Apple’s transition from iPhone to post-iPhone will assume new
energy in coming weeks: The company, in addition to unveiling new smartphones
this week, is expected to reveal a fifth version of its smartwatch that
analysts say will have new casing and improved battery life, and be
further liberated from the iPhone with a full App Store.
The new smartwatch is expected to add more health features,
including the ability to track sleep patterns, analysts say.
The addition of those features would
deepen Apple’s foray into health, a category that Chief Executive Tim Cook said
would redefine the company. The fourth-generation Apple Watch, released in
2018, was equipped with electrodes and sensors that turned it into an electrocardiogram able to measure a
heart’s electrical activity and detect potentially dangerous
disorders.
Health capabilities helped Apple increase its smartwatch
shipments to 5.7 million in the most recent quarter, a 50% increase from a year
earlier, according to Strategy Analytics. And smartwatch sales have helped lift
Apple’s wearables and accessories business, including AirPods, by 35% to nearly
$18 billion through the first three quarters of this fiscal year.
Apple also is on the cusp of
releasing new subscription services for TV shows and videogames
announced in March. The company could announce pricing and availability for
those services, known as TV+ and Arcade, as soon as this week, analysts say.
The combination of wearables and
services will be key for Apple to move past the iPhone, said Neil Mawston of
Strategy Analytics. He said the last mobile phone giant, Nokia Corp., struggled when
it attempted to make a similar transition with its business.
—Yoko
Kubota contributed to this article.
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