Apple’s upcoming product launch has sent speculation into customary overdrive.
The playbook for these early-autumn events is now well established though. So much so that by the time the date is imminent, rumours—helped by well-placed leaks—are so detailed and nuanced there hardly seems any point of a ‘big reveal’ at all.
This is a problem for Apple, because it looks like these tactics are reaping diminishing returns of enthusiasm: investors are less and less impressed and consumers are getting bored.
On the date last September when the group’s flagship product, the iPhone, was updated, shares slipped 2%. That was well before the group confirmed its first ever iPhone sales decline a couple of months later.
This time around, jaded talk combines with the realization that it’s unlikely to be an iPhone ‘leap year’—when updates bring ‘next level’ advances.
All this has left a broad suspicion that tomorrow’s launch could be pretty much a non-event; in line with iPhone sales growth forecasts of only 2% at most between 2015 and 2020.
Our view is that whilst the razzmatazz quotient on Wednesday night might be relatively low, it would be a mistake to write the event off entirely.
To us, it’s inconceivable that the world’s most highly valued company will soft pedal its first smartphone since handset sales stopped growing. In fact, Apple says it will innovate its way back to iPhone sales growth, though that might take a while.
The date of one of its biggest events of the year—7th September—is a clue in itself. Because it echoes the next logical iPhone model number, it puts the smartphone squarely in the spotlight, regardless of whether new features are perceived to be radical or not, or even if the handset is called something else entirely.
Our best-informed and most up-to-date product guesses are as follows:
- Perhaps Apple’s most obvious new feature hint has been about its iPhone camera. Apple’s top-end smartphones have typically sported among the best built-in cameras around. The latest might be fitted with a dual-lens. Photographers have pointed out that the rather elaborate invitation to Wednesday’s event was centred on an image using the ‘bokeh effect’. The artifice is only truly possible with a dual-lens set-up
- Removal of headphone jack: this has been the most widely speculated iPhone 7 aspect. Absence of a 3.5mm headphone jack would also point to either inclusion of a new Bluetooth in-ear set as standard, or one which plugs into the ‘Lightning’ charging port under the iPhone
- Home button removal: replacement of this with a flatter non-press-able circle would extend Apple’s introduction of interfaces which create the illusion that you can press them on its latest laptops
- Size: suppliers have not reported demand for screen sizes other than the current 4.7 and 5.5 inch iPhone 6 versions
- Price: Apple would upset its cart big-time if it didn’t follow its pattern of allocating high-end prices to new high-end phones with earlier versions then sold at a discount. iPhone 7 would price at £550/$650 and £789/$849 under this scheme
- Scrutiny of Apple’s biggest component suppliers this year also strongly points to a new version of Apple Watch on Wednesday
- Apple indirectly flagged iOS 10 software updates for iPads and iPhones at its Worldwide Developers Conference (WWDC 2016) in June
- Bloomberg reported last month that new Macs, iPads and desktops are in the pipeline too. The laptops are likely to be unveiled on Wednesday, but Bloomberg quoted sources saying new tablets wouldn’t emerge till 2017.
As you can see, no game-changing innovations are expected to be announced, and this is why investor sentiment has been subdued for a fortnight, with shares edging 1.5% lower.
On the other hand, even if Apple doesn’t try to wrong-foot low expectations, current sentiment, as well as downgraded forecasts, are now well baked-in. 41 out of 47 analysts whose recommendations are published by Reuters now rate Apple a buy. That compares with 36 out of 48 who were saying ‘buy’ during September 2015.
A rise in Apple shares isn’t guaranteed immediately after tomorrow’s event, of course, though options volatility does not currently point to swings as large as those seen in March and June.
In short, Apple’s big reveal is unlikely to hit its shares hard, if at all.
So long as the group’s sales and earnings forecasts don’t fall further in the month’s ahead, the stock should at least hold on to the 18% gain made during its recovery from June lows.
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