recently announced that it will host an event on Sep 9, 2014 at the
Flint Center for the Performing Arts, near its headquarters in
Cupertino. Although the company did not provide any details, it is
highly anticipated that the iPhone 6 will be launched on that day.
Over the last couple of years, the September event has gained
special importance as Apple has historically used it to unveil new
iPhone models. In 2013, the company launched iPhone 5S and 5C on
the second Tuesday of September. This year, Apple is expected to
launch two iPhone models, one with a 4.7-inch screen, and another
with a 5.5-inch display.
Reportedly, Apple will use the unbreakable and unscratchable
Sapphire glass for the cover of its new iPhone. Currently, Apple
uses sapphire in the camera lenses and for the protective disk that
serves as the Touch ID home button for iPhone 5S.
Sapphire is a potential substitute for Gorilla Glass produced by
), which, in turn, is currently used for iPhone screens. However,
since sapphire is more costly (approximately 7 times) than gorilla
glass, we believe that Apple will be forced to hike iPhone 6 price
in order to protect its gross margin. This may lower Apple's
competitive edge against the likes of Samsung, Google and Microsoft
Reportedly, Apple is also expected to unveil near-field
communications (NFC)-based payment system for the iPhone during the
event. Dutch chip maker, NXP Semiconductors NV, is supplying the
NFC chips that will enable iPhone users to pay by touch.
Apple is also rumored to launch the much-anticipated iWatch at the
event. Reportedly, the company has outsourced the production of the
device to Taiwan-based Quanta Computer Inc. The iWatch is expected
to have a rectangular display measuring nearly 2.5 inches
diagonally, which will be supplied by LG Display Co. Ltd.
The wearable device is believed to comprise a sensor (developed by
Singapore-based sensor maker Heptagon), which in turn will enable
users to monitor their pulse. Moreover, it will be equipped with a
touch interface coupled with wireless charging capabilities.
However, the device needs to be paired with a smartphone or a
tablet in order to carry out functions like texting and voice chat.
Per sources, Apple expects to ship about 50 million iWatch units
within the first year from its date of release in the market. We
believe that a September launch (originally expected in October)
will help Apple to counter the growing competition from Samsung and
LG in the wearable market.
Per Gartner, wearable smart electronics will emerge as a $10.0
billion industry by 2016, with the chunk of the revenues coming
from athletic shoes and fitness tracking devices. The wearable
sector is poised to deliver robust growth with companies like
) set to enter the space sometime later in 2014.
Nevertheless, we believe that all eyes will be on the upcoming
iPhone launch. A big screen iPhone will help Apple counter the
intensifying competition from Samsung as well as low-priced Asian
handset makers. A glimpse of iWatch, if not the launch, will also
boost Apple's share price significantly.
Currently, Apple has a Zacks Rank #3 (Hold).
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