Apple unveils latest iPhone

Apple Inc. Wednesday announced improvements to the iPhone that stopped short of a major overhaul, hoping that the upgrades will revive sagging sales of its flagship product.

The new iPhone 7 and iPhone 7 plus offer longer battery life, more storage and brighter screens than their predecessors, but eliminate the traditional headphone jack.

Buyers of the iPhone 7 Plus, which at $769 is Apple’s most expensive new model ever, will also get a new two-camera system that promises richer photos and videos.

But the new phones lack a must-have feature, like the larger displays that debuted with the iPhone 6 and 6 plus in 2014, igniting a meteoric sales surge.

That breaks an Apple tradition of major design changes every other year and poses a crucial question for the new models: Will users find enough value in the improved features to upgrade from older models?

In their immediate assessments, analysts were divided. ‘There’s a fairly compelling set of stuff here, especially if you’re coming from an iPhone 6,’ said Jan Dawson, chief analyst with Jackdaw Research. In particular, he cited the dual camera, which he believes will eventually be included in lower-cost Apple phones. Apple also doubled the
storage on base models, to 32 gigabytes, from 16.

Others were more skeptical. ‘I think it is a minor upgrade,’ said Chetan Sharma, an independent consultant. He said Apple may benefit from Samsung Electronics Co. ’s recall of its most recent model, which could prompt users of the competing Android operating system to try Apple’s iPhones.

‘At best, it might be at par with last year’s sales numbers and probably will come in a bit lower than that,’ Mr. Sharma said of the iPhone.

Apple built its reputation on smartphone innovations that kept existing users upgrading and new customers flocking to the company’s devices, even as low-cost devices with similar features arrived from rivals such as Samsung and Huawei Technologies Co.

The iPhone is Apple’s most popular and most profitable product, accounting for nearly two-thirds of the company’s revenue. But sales are declining for the first time in the device’s nine-year history, falling 23% in the quarter ended June 25.

IPhone owners have been holding on to their devices longer in recent years, as Apple’s improvements have been less dramatic and because the economics of upgrading have changed.

Citigroup estimates the handset replacement cycle lengthened to 29.6 months in the second quarter, up from less than 24 months in 2011. U.S. carriers have stopped subsidizing new phones, meaning most customers looking to upgrade must pay at least $650, either upfront or in monthly payments.

Outside the U.S., Apple said the new phones would be available more quickly around the world than prior models. The initial rollout, on Sept. 16, will include 28 countries, up from 12 for the iPhone 6s last year; the phones will reach an additional 30 countries a week later.

‘Perhaps the biggest surprise was the aggressiveness of the iPhone rollout,’ said Toni Sacconaghi, an analyst at Sanford C. Bernstein & Co, in an email message.

Technically, the new phones are a study on how Apple leverages its design expertise to build a device that it controls from chip to screen. ‘It makes all the things you do so much better,’ said Tim Cook, Apple’s chief executive.

In a move likely to draw criticism from many users, Apple eliminated the traditional headphone jack. Headphones will connect through the Lightning port used to charge the phone.

Apple also introduced $159 wireless headphones, called AirPods that rely on a homegrown wireless microprocessor.

Apple says the AirPods are a better sounding, easier-to-use alternative to wireless headphones currently on the market.

Some analysts believe the wireless earphones will push the industry to drop wired headphone connections.

The dual-camera system on the back of the iPhone 7 Plus isn’t the first in the market, but is the best product available, said Tim Bajarin, the founder of Creative Strategies Inc., an independent analysis firm.

‘They have taken us into the realm of the [digital SLR camera],’ he said after trying out a demonstration version of the phone.

The new camera leverages Apple’s chip and software expertise to run a battery of image improvements every time a photo is snapped, performing 100 billion operations in 25 milliseconds, Apple said.

At an event in San Francisco, Apple also introduced a new version of its smartwatch, dubbed Apple Watch Series 2.

The watch behaves essentially the same as the original but is water resistant, so it can be used in a swimming pool.
Apple featured fitness-related uses for the watch.

The new watch, which includes a built-in global-positioning system, goes on sale Sept. 19 for $369 and up, and the older Watch will drop in price to $269.