Apple’s biggest event of the year is just a few days away, with the iPhone 14, Apple Watch Pro and new AirPods on tap. Also: Trademark filings give a hint about names for the company’s mixed-reality headset, the iPhone maker leaves Didi’s board, and its chief privacy officer plans to exit.
Last week in Power On: What Apple’s Far Out event invitation says about its iPhone 14 event plans.
The Starters
After several weeks of anticipation, we’re in the home stretch: Apple Inc.’s biggest event of the year is about three days away. This Wednesday, at a presentation dubbed “Far Out,” the company is set to unveil the iPhone 14 line, a fresh slate of smartwatches and new AirPods.
Last year, I called the iPhone 13 an incremental update to the iPhone 12. It ushered in some camera improvements and added ProMotion to the Pro version, but wasn’t a departure from the earlier model. At the time, I expected the iPhone 14 to bring more significant changes. While that’s still true, I think the enhancements—for the second year in a row—will be more modest than mind-blowing.
The device will continue to come in four variations: two Pro models and two standard versions. But, as I’ve covered exhaustively, there will be no iPhone 14 mini to succeed the iPhone 13 mini. Instead, Apple is focusing on large devices. It’s planning a 6.1-inch iPhone 14, 6.7-inch iPhone 14 Plus, 6.1-inch iPhone 14 Pro and 6.7-inch iPhone 14 Pro Max.
The regular iPhone 14 models will get some camera hardware changes, but the most significant upgrades will be reserved for the Pro line—and that could be a theme of the event. The company’s upscale products should generate the most fireworks at Wednesday’s launch, which will include a new high-end Apple Watch and upgraded AirPods Pro earbuds.
Unlike the standard model, the iPhone 14 Pro is poised to get a faster A16 chip, an always-on display and a 48-megapixel rear wide-angle camera system.
Besides those bells and whistles, expect the iPhone 14 Pro to get some design changes—the most significant being a revamped notch area for the camera and Face ID sensors. This will mark the second year in a row that Apple reduces the size of the notch, though last year’s change didn’t bring a real functional improvement.
The new notch will be made up of hardware cutouts for the front-facing camera (with autofocus for the first time) and improved facial-recognition sensors. When the device is in use, the notch will look like a single, capsule-shaped hole.
I’m told that if Apple didn’t blend the two cutouts it would look odd while watching video or scrolling through blocks of text. Despite the additional screen real estate freed up by the smaller notch, I wouldn’t expect the status bar at the top of the iPhone to change much.
Beyond the notch, I’m told to expect the iPhone 14 Pro models to appear slightly larger overall and include slimmer bezels. They will have bigger batteries too.
There’s also a significantly larger camera area on the back of the iPhone 14 Pro and Pro Max for the new 48-megapixel wide-angle system and improved telephoto and ultrawide-angle sensors. I’m expecting enhancements to video recording and low-light photography as well.
And Apple will give eSIM a bigger push this time around, with carriers preparing to steer users toward the digital, embedded SIM cards rather than physical ones. In fact, Apple has considered removing the physical SIM card slot altogether beginning either this year or next for some models.
Altogether, these aren’t game-changing overhauls, but I still think they will be enough to entice users of iPhone 11 models and earlier to upgrade—especially given my expectation of another year of strong trade-in deals from Apple and its partners.
I expect the new iPhones to go on sale on Sept. 16, about a week earlier than usual, which should give Apple a few more days of revenue for its September quarter. Given the tough comparison with last year, when the company saw a significant Covid-induced sales jump, Apple could use the extra few billion dollars to lessen investor concerns about slowing growth.
On paper, Apple makes about 50% of its revenue from the iPhone, but the actual percentage is far higher. That 50% number represents cash made by selling actual iPhone units, ignoring the device’s impact on other products. AirPods and the Apple Watch only work well for iPhone owners, and a new phone can spur shoppers to buy additional accessories.
The AirPods and Apple Watch are the top performers within the company’s Wearables, Home and Accessories category, which generates about 10% of its revenue (the Apple TV and HomePod are in the same segment, but updates to those products aren’t coming until later).
That is probably why Apple is releasing upgrades for the iPhone and its top two accessories simultaneously. The new AirPods Pro will update a model that first went on sale in October 2019. I reported last year that new AirPods Pro would arrive in 2022, and now I’m told that Wednesday will be their big unveiling.
The most significant new product coming will be the company’s first Apple Watch Pro. It’s designed to go straight after Garmin Ltd.’s high-end, rugged watches—a lineup aimed at heavy-duty athletes like mountain bikers, hikers and marathon runners.
While Apple held about 36% of the smartwatch market in the second quarter, according to Counterpoint Research, here’s a statistic you may find surprising: Even though Apple is known for premium prices, Garmin is the market-share leader for models that cost $500 and up. With the Apple Watch Pro, that could change.
The new high-end Apple Watch will have a noticeably larger display, so users can view redesigned watch faces and more fitness and health-tracking statistics at the same time. It will also have a larger battery, along with a low-power mode, and a rugged titanium casing. Moreover, it features an all-new design that revamps a form factor first introduced with the Series 4 in 2018.
I’m told that the Apple Watch Pro will be fairly large and probably won’t appeal to all consumers, as it’s going to be bigger than most wrists. Given the larger size, older Apple Watch bands may not look flush with the device, but the new case is designed so existing bands can still work—contrary to some rumors I’ve seen.
The device should appeal to people who’ve coveted the also-large Garmin offerings. Apple has been working on this new watch for a while, and I first reported on it all the way back in March 2021.
As with the introduction of Pro iPhones in 2019, releasing an Apple Watch Pro line will let the company reserve its most significant new features for a pricier device that can bring in more revenue. Given the new capabilities, I expect this watch to come in at least $900 to $1,000, topping the current Apple Watch Edition. For comparison, Garmin’s high-end watches cost between $1,000 and $1,500. Amazfit also competes in this category, though generally at lower prices.
The other two Apple Watches being introduced on Wednesday won’t be significant overhauls. There’s a new Apple Watch SE coming that will look like the current model from 2020 but see its chip upgraded from the S5 to an S8. That processor will also be included in the Series 8 standard and Pro models.
The main updates coming in the flagship Series 8 will be a new body-temperature sensor and women’s health features related to fertility (these capabilities are also coming to the rugged model). That will add to the device’s existing health features, including the EKG, blood-oxygen and heart-rate functions. I first reported on plans for the upgrade over a year ago.
While some Apple watchers have called for the company to further diversify beyond the iPhone, the company is actually continuing to diversify with the iPhone. It’s seeking to generate more revenue from products tied to the device while reserving its biggest enhancements for its higher-end, more-profitable models.
One other thing to watch for: In March, I reported that the company is gearing up to launch an iPhone subscription service tied to Apple One. As of now, I have no reason to believe that won’t happen before the end of the year.
And Sept. 7 won’t be the end of Apple’s Pro product blitz. It will continue with the launch of iPad Pros and high-end Macs in October.
Until then, stay tuned Wednesday on the Bloomberg Terminal, Bloomberg.com and Twitter for coverage of the company’s Far Out event.