Apple Inc.’s annual event in Cupertino, California on Tuesday is easily the most-anticipated iPhone launch in a long time, as the tech giant will make major form factor changes to the popular smartphone.
It’s also the first event to be held at the company’s new headquarters, which includes the Steve Jobs Theater – a 1,000-seat, 20-foot-tall glass auditorium that reportedly includes leather seats, a revolving elevator and a hidden demonstration area.
The iPhone 8 is expected to be a game-changer given its revamped, including an edge-to-edge display, but the device is also expected to have several new features to enhance the user experience.
Of course, that won’t be everything Apple unveils on September 12, as the company’s co-founder, Steve Jobs, always used the phrase “one more thing” to surprise event attendees during his keynotes. Some of those announcements included the ability to purchase and download movies through iTunes, and the introduction of FaceTime.
“Although expectations remain high, we think the event still has potential to surprise investors on the upside, particularly as some of the new iPhone features are demonstrated live,” said Amit Daryanani, an analyst at RBC Capital Markets.
He expects Apple will also introduce a new Apple Watch with a cellular connection, making it a better standalone product. It should also have improved water resistance, battery life and biomedical capabilities.
Cellular connectivity will enable the watch to be more functional as an independent device, but it also may require a supplemental data plan.
Apple could also unveil a new TV product that offers 4K streaming, as well as software updates for all of its devices, but for investors, the iPhone remains the focal point. Expectations for a higher average sales price for the flagship smartphone peg the cost at between $999 and $1,199.
So not only are the smartphone’s new features expected to drive unit sales and average prices higher, but Daryanani thinks it should allow Apple to improve its gross margins in the first quarter of fiscal 2018 (ending in December).
J.P. Morgan analyst Rod Hall noted that the specific week of October that the device begins shipping will have a few million units of impact on Apple’s December earnings.
He also highlighted uncertainties related to the pricing of the new smartphone, which could be called the iPhone X (to mark the device’s 10th anniversary), but pointed out that price elasticity (price-based changes in demand) is low in the luxury market. That’s the space Apple is targeting with this device.
“The most important thing that Apple is likely to say about the Apple TV financially relates to the content available on the device,” Hall said, adding that Amazon Prime Video should finally be made available.
Investors likely want to see more TV providers, such as Hulu, be integrated into Apple’s content aggregation app.
Much like the Apple TV hardware, the Apple Watch isn’t a meaningful earnings driver, but as Hall noted, it certainly increases the stickiness of the iOS platform, and adds value to a variety of users, baseball players included.