AAPL Apple Inc

By Tim Higgins 

Apple Inc. unveiled four iPhone 12 models capable of connecting to a much faster 5G cellular network, bringing new attention to the wireless technology that investors are betting will lead millions of customers to upgrade their devices.

Chief Executive Tim Cook stood at the company's Cupertino, Calif., headquarters to kick off the event Tuesday to reveal Apple's new flagship devices, which was held by webcast. It was the second of the tech giant's virtual product events that Covid-19 has reconfigured after the pandemic closed businesses and left people sheltering at home around the world for much of this year.

The iPhone 12 offered a new physical appearance from last year's smartphone, moving from a rounded design to a flatter-edged look reminiscent of the iPhone 4. Prices for the new phones were roughly in line with last year's, though a smaller 5.4-inch iPhone 12 Mini became the least expensive new version, starting at $699.

Shares slipped during the event, which has occurred with previous Apple events, before regaining later in the day. With few people familiar with the new cellular service, Mr. Cook made an effort to describe why 5G technology would improve their experience. He cited improved downloads and uploads, higher-quality video streaming, better gaming and less network congestion. Apple also highlighted the integration with the company's new A14 Bionic microchip.

"Today is the beginning of a new era for iPhone," Mr. Cook said.

The presentation included demonstrations of how 5G iPhones could be helpful in downloading important medical images and for remotely designing factory spaces -- tacit acknowledgments that some of the most likely customers for the technology might be business users who can benefit from faster connections.

Verizon Communications Inc. CEO Hans Vestberg, who participated in the event, acknowledged customers' lukewarm response to 5G so far even as he suggested Apple's new phones would lead many to reconsider.

"Until now, most people have taken a wait-and-see approach to 5G. They've been waiting for 5G to get real," Mr. Vestberg said. "Well today, with iPhone, the wait is over."

The prediction that 5G would resonate more with consumers now that Apple has unveiled the capability in its phones follows a familiar pattern. The company has previously introduced new technology or features in its devices that might have been available elsewhere but began catching on with users only after Apple had applied its marketing muscle, analysts said.

"Apple almost provides like the Good Housekeeping Seal of Approval," said Mark Vena, a senior analyst for Moor Insights & Strategy. "They tend to validate the technology, which is unfair because you could go out today and buy a Samsung phone" with 5G.

Some analysts are skeptical that customers will flock to a 5G phone without a must-have application or service to help them see the appeal of the new technology. U.S. cellular networks are still being upgraded, and service might be disappointing in some spots for early adopters. It is also uncertain how the coronavirus will affect sales of the new devices. The pandemic delayed production of the flagship phone earlier this year, which led Tuesday's unveiling to be rescheduled from its traditional September date.

The emphasis on the guts of the iPhone marked a change from recent years when many new features involved cameras and other iterative updates. The lack of dramatic change has come as the smartphone market has matured more than a decade after Apple first introduced the iPhone.

The iPhone 12 has been hotly anticipated by investors who have driven the company's shares up 69% in 2020, partly because of excitement over the new phone. Those expectations and Apple's success in driving up services revenue helped it become the first U.S. public company to eclipse $2 trillion in market value earlier this year.

Analysts surveyed by FactSet, on average, predict iPhone revenue will rise 15% to $160 billion in the fiscal year that began Oct. 1. That is about $6 billion shy of the record set in fiscal 2018, when the $1,000 iPhone X helped bolster sales even as shipments failed to reach a new high.

Katy Huberty, a veteran Apple analyst for Morgan Stanley, last week predicted the company could ship as many as 240 million iPhones this year, helped by customers who haven't upgraded in several years and by excitement for 5G. That would set a record, beating the 231 million devices sold in fiscal 2015. Sales at that level could send the company's shares up 37% from Monday's close to a market value of almost $2.9 trillion, she said.

"We expect this fall's launch to be the most significant iPhone event in years," she wrote in a note to investors.

Mr. Cook has been stretching the iPhone lineup in recent years to appeal to an array of pocketbooks. That was on display again Tuesday: A step up from the iPhone 12 Mini sits the iPhone 12, starting at $799 with a 6.1-inch display. On the higher end, the iPhone 12 Pro starts at $999, with the Pro Max offering the largest display -- at 6.7 inches, an increase from 6.5 -- and beginning at $1,099.

The iPhone 12 and 12 Pro are available for preorder on Friday, and the iPhone 12 Mini and iPhone 12 Pro Max will be available Nov. 6, Apple said.

The latest smartphone arrives five years after iPhone unit sales peaked. Mr. Cook has pushed the company to sell pricier versions of the device and to rely on software services and wearables, such as smartwatches and headphones, to boost revenue.

In a nod to those efforts, the company began its Tuesday event by introducing an updated HomePod that is smaller than its previous version of the speaker and is priced at $99.

Apple began selling the HomePod in early 2018 after unspecified delays pushed back the rollout following its 2017 debut. The voice-activated device was Apple's attempt to catch up with the success of Amazon.com Inc. and its smart speakers in late 2014, though when the HomePod made its debut at $349 it was considerably more expensive than its rivals.

To make the case for a pricier offering, Apple has previously emphasized its sound quality, especially for music. The device's price has fallen since it first went on the market.

Mr. Cook appeared publicly Tuesday for the first time since a Democratic-led House subcommittee issued a report last week claiming Apple uses its control over software on its devices in an anticompetitive manner. Apple has rejected the report's conclusions and said it doesn't have a dominant market share in any area.

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

October 13, 2020 18:07 ET (22:07 GMT)

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