Apple’s Latest IPhone Set to Become Best-Selling Gadget
Apple Inc. (AAPL) unveiled a taller, lighter and speedier iPhone that’s poised to become the fastest selling technology gadget in history -- even as competition accelerates in the $219.1 billion smartphone market.
“This is going to be the best-selling consumer electronics device of all time, bar none,” said Carl Howe, an analyst at Boston-based Yankee Group. He’s among analysts predicting that Apple will sell more than 10 million by month’s end, surpassing the record set last year by the previous model, the iPhone 4S.
Chief Executive Officer Tim Cook took the stage in San Francisco yesterday to tout iPhone 5, which runs on faster wireless networks, boasts a bigger screen and has a chip that handles tasks more quickly than past versions. Even with few surprising new elements, Apple is betting that the device is loaded with enough features to set it apart in a market swiftly crowding with phones by Nokia Oyj (NOK1V), Microsoft Corp. (MSFT) and Samsung Electronics Co. (005930)
Apple’s rivals are introducing smartphones packed with new functions. Samsung said it has sold more than 20 million Galaxy S III handsets, which have a bigger screen than the iPhone 5 and also work with speedier wireless networks. Nokia has adopted Microsoft’s new mobile software and debuted a phone last week with a spring-mounted camera for steadier pictures. Google (GOOG) Inc.’s Motorola Mobility has introduced a fresh batch of handsets running an updated version of the Android operating system.
Against this backdrop, Apple may not have added enough new features, said Anil Doradla, an analyst at William Blair & Co., in a research report. One missing element on the iPhone 5 is the technology needed to work on the network of China Mobile, China’s biggest wireless carrier, he said.
“Although the company did a commendable job of improving different functions over the previous iPhone, we did not come away with a wow factor,” Doradla said.
Because Apple only introduces one new iPhone a year, each unveiling is critical. Apple has sold more than 244 million units since its 2007 debut, and the handset now accounts for about two-thirds of profit. By contrast, Samsung has become the world’s largest overall seller of handsets by introducing several new models a year.
As many as 58 million units of the iPhone 5 may sell by the end of the year, according the average estimate of analysts surveyed by Bloomberg. That could generate as much as $36.2 billion in sales for Apple, according to data compiled by Bloomberg.
Sales could be hampered by limited supplies of new screens Apple introduced for the iPhone 5 as well as the chips that allow the device to connect to speedier wireless networks, said Toni Sacconaghi, an analyst at Sanford C. Bernstein in New York.
Apple upgraded the software that runs on the iPhone to include new mapping and turn-by-turn navigation features, as well as tools that make it easier to share photos and other content with Facebook Inc. (FB), the largest social-networking service.
Sold with a wireless contract, the iPhone 5 will cost $199, $299 or $399, depending on how much memory it contains. The device will be available for orders on Sept. 14 and lands on store shelves Sept. 21 in the U.S., Australia, Canada, France, Germany, Hong Kong, Japan, Singapore and the U.K. It goes on sale in 22 more countries on Sept. 28.
Apple gained 2 percent to $682.98 at the close in New York. The stock has increased 69 percent this year.
The iPhone, introduced in 2007, has helped make Apple the world’s most valuable company. Once a niche computer maker, Apple now generates higher profit than technology competitors Hewlett-Packard Co. (HPQ), Microsoft and Google.
Having popularized handheld touch-screen devices that offer swift Web downloads and a range of games, entertainment and productivity tools, Apple is now battling with manufacturers led by Samsung for dominance of a market that leaped 62 percent last year.
Yesterday’s event marked Apple’s first iPhone introduction since co-founder Steve Jobs passed away in October a day after the iPhone 4S was unveiled. Cook made brief introductory remarks at the start of the event before turning it over to other executives to show off the new iPhone, as well as changes to the iTunes music store and line of iPods.
As much the iPhone 5 represents innovation, it also demonstrates Apple’s penchant for following competitors on some features, including screen size and compatibility with faster wireless networks.
With Samsung, Google’s Motorola Mobility and HTC Corp. (2498) introducing devices with bigger screens, the iPhone 5 is the first time Apple has changed the size of the device’s screen. The 4-inch screen compares with 3.5 inches in earlier iterations.
“We’ve worked on that for a few years to come to what we think is the optimal size to give you more screen, but something that is super comfortable, easy to use and is thin and light and fits in your pocket,” said Phil Schiller, Apple senior vice president for marketing. “We think this is the ideal size.”
The new iPhone, Apple’s sixth, works with so-called long- term evolution, or LTE, data networks being introduced by companies including AT&T Inc. (T) and Verizon Wireless. LTE is designed to enable quicker Web browsing as well as faster download speeds for video and music than existing networks.
Even though using faster networks can drain a phone’s power supply, Apple said iPhone 5’s battery lasts longer than earlier models. The iPhone 5 also comes 18 percent thinner and 20 percent lighter than the iPhone 4S, Apple said. To make the device more svelte, Apple changed the design of the charging- dock connector. To accommodate the slew of accessories that are available for the older dock design, Apple said it will sell an adapter.
“The iPhone 5 represents the most radical revision yet to the biggest-selling smartphone,” Mike Gikas, an editor at Consumer Reports, said in an initial review of the product. “It has enough improvements and enhancements that even satisfied owners of the last-generation iPhone 4S will want to consider upgrading.”
Like previous iPhones, the new model will be available in black and white.
‘Blowout, Home Run’
Yesterday’s event highlighted how the high level of interest in Apple has made it almost impossible for the company to keep products secret. Pictures of the new iPhone that were posted on websites before the announcement proved accurate.
“There’s more attention than ever on Apple,” Schiller told reporters after the event. “That’s a great thing.”
Apple also enhanced the speech-command service Siri, adding features that let users search for sports scores and make dinner reservations by speaking to the smartphone. A new application called Passbook gives users one application to store their loyalty gift cards, as well as digital tickets to movies, concerts and sporting events.
“They have built a juggernaut,” said Matt Murphy, a partner at Kleiner Perkins Caufield & Byers, a venture capital firm that invests in iPhone application companies. “This is going to be an absolutely blowout, home-run product.”
In addition to providing a showcase for new features, yesterday’s event also highlighted Apple’s growing rivalry with Google, the maker of the Android operating system that powers about half the world’s smartphones. Apple introduced its own mapping software to replace Google and removed Google’s online video service, YouTube, from the batch of applications pre- installed on the iPhone.
During the event, Apple also announced a new version of its iPod Touch wireless music player. The new model has a 4-inch screen to match the iPhone 5 and comes with a 5-megapixel camera and stronger processor for playing games and other applications.
“When you look at each of these, they are incredible, industry-leading innovations by themselves, but what sets them apart and puts Apple way ahead of the competition is how they work so well together,” said Cook, who was dressed in an untucked black dress shirt, jeans and tennis shoes, before ceding the stage to the Foo Fighters.
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