Apple's 10th-year glitch

Apple’s ‘Special Event’ blocks out Tuesday for a large chunk of Wall St, but the main feature is officially not happening.

Apple’s 12th September ‘Special Event’ blocks out Tuesday for a large chunk of Wall St, but the main feature is officially not happening.

True, published details are sparse, though new iPhone models are almost inevitable given that the crucial holiday season is only weeks away. In bringing those new handsets to market, a host of complications have reportedly challenged even the largest listed company in the world, throwing curve balls instead of offering an easy win: an anniversary iPhone that lifts sales exponentially in the best retailing quarter of the year.


OLED obstacle

One of the biggest wrinkles comes from Apple releasing more than one new handset at the same time, following a pattern established early on. This time, not only will an entirely new model be unveiled, the group is also expected to update recent iterations, iPhone 7 and iPhone 7 Plus. This not only complicates demand estimates, but also increases chances of sourcing pressures for the hundreds of parts required for each handset. The more advanced and innovative Apple intends to be, the tougher sourcing such supplies on time becomes. The most recent delays reportedly centred on the use of organic light-emitting diodes (OLED) for the new handset’s screen. The main crunch point was Apple engineers’ wish to innovate by moving the fingerprint scanner from the ‘home’ button and making the entire screen capable of biometric identification, using a fingerprint or facial recognition. With latest leaks suggesting there will be no fingerprint scanner at all, it appears the design/technology gambit may have failed, requiring users to unlock the latest handset using facial-recognition technology, or even just an old-fashioned password.

At worst, glitches have plagued production of new handsets, setting back manufacturing by as much as a month. That would imply shortfalls around the time orders are expected to be placed later in September. If reports of the mishap are accurate they might be a partial explanation of why Apple shares had slipped almost 5% by Friday’s close since the end of August. The key to negative impact would be whether shortages extend beyond depletion of the first batch of inventory, sales of which are expected to start on Friday 22nd September. Apple has guided the market to expect $49bn-$52bn in revenue for the quarter ending 30th September, above a fair cohort of consensus forecasts. Missed sales due to lower than expected production may only slice results for Apple’s fourth quarter by a sliver—Q4 will probably contain just 8 days of new product sales. But that won’t save the stock from further weight if there’s any sign of iPhone shortages in the winter season.

$1,000 question

Attention will also be on features of the new handset itself. With prices forecast at $999 – $1,199, the highest for any iPhone yet, Apple will be even more dependent on its admittedly considerable ability to mediate desirability regardless of mini controversies. The lack of a headphone jack on iPhone 7 did not crimp sales.

We collate potential major new iPhone features from myriad speculative sources below.

  • Size: at least 4.7, 5.5 inches as per current models
  • Display: OLED, edge to edge (allowing more space, but leaving no space for a fingerprint sensor)
  • Processor/Power: Apple-designed A11 chip set to replace A10. Capable of providing a higher clock rate at lower power consumption, enabling longer battery life
  • Resumption of the use of glass for the new iPhone’s body. Apple started using aluminium from iPhone 5 onwards
  • Wireless charging: though lightening connector expected to remain
  • Vertical dual lens camera on the back vs. horizontal set-up on iPhone 7 Plus
  • Optical image stabilization on all cameras

Beyond iPhones

One obvious reason Apple hasn’t made handsets the focus of the event is that it’s going to push several more new products and services on Tuesday. A summary of the least disputable talk follows.

  • New Apple TV: this would allow the better integration of Amazon Prime Video that was announced at World Wide Developers Conference earlier this year
  • Apple Watch with higher LTE (AKA 4G and higher) capability
  • Updates of iOS, watchOS software
  • A new iPad Mini

There’s no question though that most attention will be on Apple’s largest revenue generator, handsets. With Apple stock barely off its latest all-time high, the group will need to meet the minimum expectations for new iPhone features and reassure that it can meet holiday season demand, or the share will face one of its frequent bouts of volatility.

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