Apple’s new iPhones arrive as glow fades

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As it nears its 10th year, the iPhone is maturing. Apple Inc. on Wednesday will introduce new versions of its flagship smartphone, but they likely won’t include the kind of significant new features that Apple consumers have come to expect every other year.
The new models will arrive at a critical juncture: iPhone sales are shrinking for the first time; consumers are waiting longer to upgrade their phones; and Apple faces fresh competition from rivals including Samsung Electronics Co. and Huawei Technologies Co.
The Wall Street Journal reported earlier this year that Apple plans to eliminate the 3.5-millimeter headphone jack, which will make the phone thinner and improve its water resistance. Critics panned the idea.
The Journal said Apple plans more radical changes for next year’s models, the iPhone’s 10th anniversary.
Apple on Monday declined to comment on “rumors” ahead of Wednesday’s announcement. The iPhone propelled Apple’s extraordinary growth in recent years, making it the world’s most valuable company.
Apple sold nearly six times as many iPhones in the year ended Sept. 26, 2015, as five years earlier. The phone accounted for nearly two-thirds of the company’s revenue.
The glow from Apple’s initial large-screen models, introduced in 2014, has faded. Revenue from the iPhone fell 23% in the quarter ended June 25, and Apple shares are down 4.9% over the past 12 months.
“The easy growth is starting to disappear,” said Neil Cybart, an independent Apple analyst. Research firm International Data Corp. estimates that iPhone sales will grow only 1.5% a year between 2015 and 2020.
In response, Apple has ratcheted up research and development spending, which reached $8.1 billion in the year ended September 2015, from $2.4 billion in 2011.
The company is exploring new products, such as an Apple-branded vehicle, code named Project Titan. And while the Apple Watch-which could also see an upgrade at this week’s event-has been a modest success, Chief Executive Tim Cook is still looking for another breakout hit to rival the iPhone.
It is a tough act to follow. The iPhone proved particularly popular in China, where Apple’s sales totaled $58.7 billion in the year ended September 2015. As elsewhere, though, Apple sales in China have cooled, falling 33% in the most recent quarter, compared with the prior year. During a July conference call with financial analysts, Mr. Cook said he was “very encouraged” by Apple’s prospects in China and India.
Analysts are less sanguine, noting that Apple’s surge in China followed… read full story

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