Apple to show off new iPhones, Apple TV on Wednesday

[September 09, 2015]  By Julia Love
 
 SAN FRANCISCO (Reuters) - With its highly profitable iPhone due for an upgrade, Apple is expected to unveil a pair of new handsets at an event in San Francisco on Wednesday, analysts say, in addition to showing off a larger iPad and an updated Apple TV.

When Apple executives take the stage at the Bill Graham Civic Auditorium, investors will be scrutinizing their plans for the next generation of the iPhone, which drove nearly two-thirds of the company's $49.6 billion in revenue in the most recent quarter.

Apple is widely expected to keep the size of the phones the same but upgrade it with an improved camera and Force Touch, a display technology that responds differently depending on how hard users press their screens.

A year after Apple rolled out iPhones with larger screens, touching off a frenzy of sales that saw revenue in the most recent quarter increase 32.5 percent from the same quarter a year ago, the latest upgrades may leave some investors and consumers underwhelmed.

"It's getting harder and harder for Apple to compete against itself," said analyst Bob O'Donnell of TECHnalysis Research. Apple shares closed at $112.31 on Tuesday and are up 14 percent over the last year, although they are down nearly 12 percent in the last three months.

Fortunately for Apple, most consumers buy smartphones under a two-year upgrade cycle, meaning the company will still likely scoop up a lot of sales, said analyst Patrick Moorhead of Moor Insights & Strategy.

"The key point of reference is not how the new phone compares to the iPhone 6, it's how it compares to the iPhone 5s," he said.

Another likely focus of the event is Apple TV, a set-top box that has seen few significant updates since its release in 2007. Although Apple has yet to hammer out deals for a long-awaited television service, analysts say the company is poised to overhaul the hockey-puck-sized device.

Expected updates include an App Store and a new user interface that allows users to make requests through the Siri digital assistant and search for specific programs and movies across apps. The company may also discuss the device's role as a hub for gaming.

Nearly 20 percent of U.S. broadband households own at least one streaming media player, and Apple has a long way to go in the market, according to data from research firm Parks Associates.

Roku is the leader in streaming media boxes, accounting for 34 percent of all streaming devices sold in the United States in 2014, according to data from research firm Parks Associates. Google Inc's <GOOGL.O> Chromecast and Amazon.com Inc's <AMZN.O> Fire TV were next. The Apple TV box came in fourth.

"It's important that (Apple) come out and really get up to date and potentially eclipse some of the other living room devices out there," Moorhead said.

Apple is also expected to pay some attention to its iPad line, rolling out a larger tablet. Amid slumping sales, Apple has tried to push the iPad into the enterprise market, and a gadget with a bigger screen may appeal to some professionals seeking to swap out their laptops for tablets, analysts say.

But any boost from the enterprise will probably not be enough to offset consumers' waning interest in the device, O’Donnell said.

"It's not going to change the arc of the iPad," he said.

(Additional reporting by Lisa Richwine,; Editing by Stephen R. Trousdale and Ken Wills)

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