Apple braces for holiday season

Tim Cook, chief executive officer of Apple Inc., holds an iPad Air 2 during a product launch at the company's Cupertino, California, U.S., headquarters on Thursday, Oct. 16, 2014. Photographer: Noah Berger/Bloomberg News

Tim Cook, chief executive officer of Apple Inc., holds an iPad Air 2 during a product launch at the company's Cupertino, California, U.S., headquarters on Thursday, Oct. 16, 2014. Photographer: Noah Berger/Bloomberg News

Published Oct 19, 2014

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Washington - Apple chief executive Tim Cook is ready to tackle the holiday season with a full product array including new iPads. His challenge now is luring the hordes of buyers that analysts are projecting.

Apple on Thursday unveiled refreshed iPads and Macintosh computers at an event at its Cupertino, California-based headquarters.

The iPads are thinner and include fingerprint sensors, with the Macs boasting features such as sharper displays and faster processors. The devices follow Apple’s introduction last month of larger-screen iPhones, a smartwatch and a mobile-payments system.

The lineup is ratcheting up Wall Street’s projections that Apple is entering a high growth phase, which Cook will now have to meet.

The chief executive is also facing calls by activist investor Carl Icahn to increase Apple’s value. Investors will get a taste of how Cook’s latest gambits are performing when Apple reports fiscal fourth-quarter results tomorrow.

“It was an innovation question 12 months ago and he’s delivered on all of the promises he was making,” Gene Munster, an analyst at Piper Jaffray, said of Cook. “Now it’s an execution game.”

Cook was confident about growth on Thursday, saying the company had “the strongest lineup of products that Apple has ever had”.

Having updated devices on store shelves is key ahead of the year-end shopping season, which is typically Apple’s most lucrative quarter.

Consumer spending on electronics in the US is projected to increase 2.5 percent to $33.8 billion (R375bn), the highest level since the Consumer Electronics Association began tracking it in 1994. The top items on technology wish lists, according to the association’s annual Holiday Purchase Pattern Study, were tablets.

Cook needs to ignite new interest in iPads after sales of the device declined for two consecutive quarters. The iPad’s global market share slipped 6.1 percentage points during the second quarter as Samsung Electronics and other smaller players nibbled at Apple’s lead, according to IDC.

“When you create a market like Apple did, all you can do is lose share over time,” Jean Philippe Bouchard, an analyst at IDC, said. “The low end of the market is just exploding.”

Brian White, an analyst at Cantor Fitzgerald, was more sanguine about Apple’s prospects.

“We believe Apple is in the midst of what we view as a ‘super cycle’ that we expect will keep the stock heading in an upward trajectory,” White wrote in a statement on Thursday.

Apple shares fell 1.3 percent to $96.26 at the close in New York on Thursday. The stock is up 20 percent this year.

Apple’s new offerings include the iPad Air 2 that is 6.1 millimetres thin, as well as an iPad mini 3. The tablets feature a fingerprint sensor, and will come in a new gold option along with silver and gray.

Apple said the iPad Air 2 was priced at $499 to $829 – with some models that had more memory costing $100 less than previous versions – and the new iPad mini was $399 to $729.

Apple also debuted a new 64.5cm iMac with a retina display hat costs $2 499 and began shipping on Thursday. The company also showed a new Mac mini, with a starting price of $499.

“Those who have iPad 1s and 2s will probably be tempted to finally upgrade,” Tim Bajarin, president of Creative Strategies, said of the new tablets. “Whether it’s a big hit or not, it’s hard to tell because right now tablets in general have slowed down.”

In the fiscal third quarter, iPad sales declined 9 percent from a year earlier to 13.3 million units, with revenue falling 8 percent to $5.89bn.

The new iPads were available for pre-order on Friday and ship this week. To help stoke demand, Apple also lowered the price of its iPad mini 2 and iPad Air, which the new models replace.

Apple’s new iPhones, meanwhile, sold more than 10 million units during their debut weekend last month. The phones were reaching an additional 36 countries this month, including China, India and South Korea, and were on track to be in more than 115 countries by year’s end, Apple said in a statement.

Cook said at the event on Thursday that the past few weeks had been the company’s “biggest iPhone launch ever”. He added that pre-orders of the smartphone in China had set a record, without disclosing numbers.

Apple experienced snafus following the debut of the new iPhones, including complaints about how some of the handsets were bending and a new version of its iOS 8 mobile operating software that caused people to lose cellular service. At the event, Apple senior vice president Craig Federighi said almost half of the company’s customers were now using the latest version of the software.

Cook also said Apple would roll out Apple Pay, the new mobile-payments system, tomorrow. He said an additional 500 banks had signed up to support the service, building upon the large banks including Bank of America and Citigroup that said they would work with the service last month. With Apple Pay, consumers can use their iPhones to pay for goods within stores such as Whole Foods Market. – Bloomberg

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