Apple Leaps Into Land of the Giants With...

September 9, 2014

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Apple Inc. unveiled redesigned iPhones with bigger screens, overhauling its top-selling product in an event that gives the clearest sign yet of the company’s product direction under Chief Executive Officer Tim Cook.

The new iPhone 6 and iPhone 6 Plus come in screen sizes of 4.7 inches and 5.5 inches, along with rounded edges and a thinner frame than earlier models, as well as higher-resolution displays. The iPhone 6 costs $199 to $399 with a two-year contract, while the 6 Plus is priced at $299 to $499. The devices — which will come in silver, gold and space gray — will be available for pre-order on Sept. 12 and ship Sept. 19, the company said.

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A new watch-like wearable device — as well as a mobile payments system and health partnerships — also are anticipated at the event, which is under way.

In the three years since Cook succeeded Steve Jobs as Apple’s top decision maker, the company has made incremental changes to existing products, raising questions of whether it could build another hit product. With today’s introduction of larger handsets, the company is responding by leaping in to new areas of the fiercely competitive consumer-technology industry.

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Apple is coming into this year’s product unveiling in a different position than in 2013. Last September, the Cupertino, California-based company’s stock was slumping and it was losing market share to Samsung Electronics Co. and low-cost manufacturers such as Xiaomi Corp. Questions abounded about whether Apple could keep innovating without co-founder Steve Jobs.

Role Reversal

Now the company’s stock is flirting with a record high. Even a recent incident of pictures of naked celebrities such as Kate Upton from Apple’s iCloud service getting posted onto the Web have done little to derail investor enthusiasm.

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Apple shares rose 1.7 percent to $100.04 as of 1:41 p.m. in New York. Apple’s stock has typically fallen at other events where it debuted new products. On Sept. 10, 2013, the day Apple introduced the iPhone 5s and 5c, the stock declined 2.3 percent.

The new iPhones comes with a custom A8 64-bit processor, which Apple said is 25 percent faster than the chips in previous models. The phones comes with a new motion processor for fitness and health-related applications. Apple said more than 200 carriers support the new handsets.

While there has been a great deal of anticipation around Apple’s new wearable device, the iPhone remains the most important piece of its business. The handset accounted for about half of Apple’s $171 billion in revenue last year, and with sales of the iPad slowing down, the company needs to keep the iPhone a blockbuster in order to maintain growth.

Big Screens

Apple is responding to a shift in consumer preference for bigger screens that give more real estate for watching videos, surfing the Web or playing games. Larger designs have been a key selling point for Apple’s rivals such as Samsung, whose marque Galaxy S5 has a 5.1-inch screen and the bigger Note it debuted last week has a 5.7-inch screen.

Bigger screens are especially popular in Asian countries such as China and Japan, two of Apple’s largest markets. According to research firm Canalys, the fastest growing segment of smartphones is models between 5-inches and 5.9-inches, which accounted for 38 percent of global purchases last quarter, up from 32.6 percent in the first three months of the year. Models with screens smaller than 5 inches fell to 60 percent of the market, from 65.4 percent.

Apple Roots

In a nod to how important today’s product line-up is to Apple, the company held the event at the Flint Center for the Performing Arts near its headquarters in Cupertino. It was the same venue where it introduced the Macintosh 30 years ago and where Jobs revealed the iMac in 1998, taking Apple from near bankruptcy to the world’s most valuable company.

The event was filled with the usual theater of Apple occasions, with celebrities and moguls in attendance. Media from around the world also packed the more than 2,000-capacity theater. News outlets from fashion and lifestyle publications sat alongside business and technology press.

The new products have been anticipated for months and company executives have stoked expectations in the past In May, Eddy Cue, head of iTunes, said products to be introduced later this year are the the best pipeline Apple has had in 25 years. In July, Chief Financial Officer Luca Maestri echoed that by saying he was “expecting a very busy fall.” Cook chimed in and said the company has an “incredible pipeline” that “we can’t wait to show you.”

To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Tim Higgins in San Francisco at thiggins21@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward

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