Can Apple shares live up to product hype

As we know, Apple doesn’t do things by halves.

That includes hype.

There’s little doubt that for retail investors and for Wall Street alike, there will not be a bigger business event than the new Apple products set to be unveiled tomorrow.

Alibaba?

Well, yes, that’s going to be major too (though market makers are dropping strong hints about a lack of buzz around the Chinese company’s IPO due later in the month.)

But Apple’s release of a new iPhone model alone was always going to whack the ball out of the park, compared to Alibaba.

It’s almost a dead cert at this point that Apple is not just prepping the launch of a flagship iPhone 6 at the event that will kick off at 6PM BST on Tuesday 9th September.

The symbolism of the venue for tomorrow’s event ought to be lost on no one—it’s at The Flint Center for the Performing Arts, close to Apple Inc. HQ, in Cupertino, California.

It’s the same venue at which former Apple CEO, the late Steve Jobs, pulled the curtain back on the first Macintosh computer, just over 30 years ago.

Given such storied surroundings, it is unlikely even Apple would risk failing to live up to its own hype.

Therefore we expect the meat of tomorrow’s announcements to match the hype of the last several months and then to overshoot it a little too.

Our list of what to expect from Apple’s new product event

The basics

• Two new iPhones

Each of two new iPhones will have larger screens than any iPhone seen before, according to analysts who specialise in second-guessing Apple’s earnings, operational moves and of course its product strategy.

It is speculated the smaller phone will have a screen that’s 4.7 inches long. It’s thought the larger phone will have a 5.5-inch tall display.

These dimensions would put the new handsets firmly in the ‘phablet’ category, which Samsung has dominated to date.

One or both of the new phones is going to feature so-called ‘sapphire glass’, according to speculation. All you need to know about this type of glass for now is that it will be stronger than Corning Inc.’s Gorrilla Glass, the type of glass used on many smartphones over the last few years.

Feature wise, iOS 8 is already out there, having been demonstrated at Apple’s World Wide Developers Conference earlier this year.

Developers seem to suggest the iOS refresh will not include a great deal of new user interface (UI) elements, but will have several enhancements in messaging, predictive typing, and then the somewhat controversial iCloud revamp.

The biggest new element of iOS might turn out to be what’s being called ‘HealthKit’.

As its name suggests, this will enable users to keep a track of their well-being by storing and checking a number of defined health-related metrics.

And that brings us neatly on to what’s widely seen as the next big theme in Apple’s forthcoming announcements.

 

• iWatch or not iWatch

•  (or if iWatch is the answer, what was the question?)

 

This area of product speculation seems to be the weakest, even for the most acute Apple product predictor.

The heightened level of uncertainty in this segment hasn’t stopped the speculation from coming, of course.

It’s just that there is a lot more unrealistic noise to filter out.

The reasoning goes a little something like this:

Apple the innovator has no concern to be first with a new product category. Rather it always seeks to be the best for the consumer. (See iPhone.)

Therefore, since several wearable watch-like devices already exist, Apple must if it’s going to enter this product segment, smash the competition back to the drawing board.

Analysts have speculated this probably means an iWatch will need to be capable of operating as a stand-alone unit, unlike, most smartwatches seen to date. These tend to require a compatible smartphone close by for full functionality.

How likely is it, therefore, that an iWatch will be completely stand-alone?

Especially bearing in mind Apple will very likely release two new iPhones tomorrow?

You can see why we think the iWatch thing is the most nebulous part of the picture.

No one is betting against the iWatch appearing in some form though.

It seems most likely we will get an announcement tomorrow, but the product release and even most of the detail may have to wait until the New Year.

There’s only so much the corporate equivalent of Super Man can achieve in one day and one season, after all.

• Don’t forget the iPad

Yes, the least talked-about new product line must surely involve the iPad.

A ‘new’ iPad makes a great deal of sense, perhaps more sense than speculation about any other product, because the current iPad is the weakest product line Apple has, on a revenue basis.

Apple’s third-quarter results marked a second-consecutive quarter of falling iPad sales.

These fell by 9.2% to 13.3m and were among the few clear let-downs in the Q3 numbers.

 

A tweaked iPad Air seems very likely tomorrow. A super-sized 12.9-inch iPad as reported by major news wires also makes sense, although logistics would seem to preclude production starting until the second quarter of 2015.

 

• The Big One: Mobile Payments

Clearly, if there is one area to speculate Apple would want to dominate, mobile payments is the best of the bunch.

Google Wallet is out there, PayPal, Square Cash–we all know them, many of us have used them, but few of us would refer to them as a ‘gold standard’.

If market and blogosphere talk are correct, Apple intends to reap the benefits of its scale, its online payments expertise and the considerable amount of trust with consumers it has left (enough said) to produce a mobile payments system that would rapidly prevail.

It would do this by partnering with American Express Inc., at least, amongst the payment card elites, and possibly also with Visa Inc. and MasterCard too.

The Near Field Communication system (known as ‘contactless’ in the UK and already well-established here) looks set to be a big part of this new payment offering.

Analysts suggest mobile payments may be the factor with the single highest potential to move shares of Apple higher. Margin potential in the field is thought to be strong, costs relatively low.

 

Apple has set itself up each September for a number of years

The chart clearly shows the enormous ramp up in Apple’s share price toward September 2012 culminating in the release of the iPhone 5.

Last year, Apple ‘let itself off the hook’ a little; by guiding opinion toward the idea that the ‘new’ iPhone would really just be a refresh of the iPhone 5, thereby lowering expectations for a ‘pop’ in the stock price.

That sort of dampening of expectations can’t really be said to have happened this year.

Therefore, any sort of let-down in terms of the momentousness of tomorrow’s announcements might well put the stock price at short term risk.

Not that Apple investors will care very much.

For several years any pause in the advancement of Apple stock has been little more than an opportunity to add to holdings and for wannabe investors to get on board at a relatively cheap price.

So there you have it, for now.