AAPL Apple Inc

By Tim Higgins 

Apple Inc. showed off its latest smartwatch with an ability to measure blood oxygen as well as a new virtual fitness service and updated iPads in an online event Tuesday that lacked the pizazz of the company's standard September product unveilings.

The Cupertino, Calif., tech company held its first virtual-only product reveal from its headquarters, where past events have attracted crowds of journalists, employees and guests to help hype the latest offerings.

Chalk up Apple's keynote event to another annual rite changed by the coronavirus pandemic. Instead of Chief Executive Tim Cook unveiling the company's latest flagship iPhone as he has done every September since 2012, Apple showed its Watch Series 6, starting at $399, and a new midtier offering called Watch SE, with fewer abilities than the high-end version and starting at $279.

"It's been gratifying to see the important role our products have played in helping people come together, carry on and move forward," Mr. Cook said as the one-hour, highly produced event began. "We know that life won't always be like this, and we're all looking forward to better days."

The company also revealed an updated iPad Air, starting at $599, with a new touch-ID button on the side that unlocks the screen and faster computing power. The latest smartphone is expected to be revealed next month after Covid-19-related delays pushed back production.

Investor reaction suggested some disappointment with the muted event as Apple's shares fell during intraday trading before closing slightly up on the day.

"It was just an OK presentation -- it lacked the normal iPhone buzz," said Keith Gangl, a portfolio manager for Gradient Investments, which has more than $2.6 billion in assets under management, including Apple. "Not disappointed, but I certainly wasn't excited."

The expanded digital services Apple unveiled Tuesday will help bolster the idea that it can drive more revenue from subscription-based products, Mr. Gangl said.

Those include a streaming fitness offering called Fitness+. The $9.99-a-month service is connected to the company's watch and aims to help users track and improve their performance. Fitness+ also offers virtual workout classes with videos on the iPhone or television.

The company also detailed a new bundling of digital subscriptions dubbed Apple One as it works to bolster its software business beyond the iPhone, which makes up about 50% of sales. The bundle starts at $14.95 a month and includes Apple Music, TV, Arcade and iCloud storage.

The new bundling service drew almost immediately renewed criticism that Apple was unfairly using its power over its platform against competitors -- claims that Apple has pushed back against as they intensified this summer.

"Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services," streaming-music service Spotify Technology SA -- which offers its own bundled packages that include Hulu -- said in a statement.

Apple defended its new bundle, saying in a statement it would recommend a plan to customers "that saves you the most money based on the subscriptions you already have" and highlighted how it could help families.

Family plans were a theme of the day. Apple offered bundled services for households as well as a new scheme allowing parents to use their own iPhones to set up smartwatches for children, giving them access to incoming phone calls while their parents can track their location.

The new products arrive as demand for tablets like the iPad has surged while the pandemic has upended daily life and left many people stuck at home. Global shipments of such devices increased 26% last quarter compared with a year earlier, according to research firm Canalys, which attributed the increased industry demand on remote work, learning and leisure. Apple doesn't break out unit sales but said revenue from the iPad rose 31% during the April-through-June period compared with a year ago.

Its new smartwatch could help Apple strengthen its already dominant position in that market, where research firm Strategy Analytics estimates it held 53% of the global share of such devices last quarter. Apple has evolved its smartwatch, which first went on sale in 2015, from a heavily emphasized fashion accessory to a device more focused on health and fitness.

The ability to track blood oxygen has become a hot feature in the latest smartwatches, said Neil Mawston, analyst for Strategy Analytics. "Health care and fitness are top of mind for consumers right now, so an updated watch that addresses those features will prove popular for Apple," he said in an email.

Blood oxygen data has emerged as a useful tool for people to gauge the effects of a Covid-19 infection on the lungs' ability to oxygenate blood. The data has helped some people assess whether to seek hospital treatment if blood-oxygen readings fall too much. Normally measured with a device called a pulse oximeter, wearables manufacturers including Alphabet Inc.'s Google, which owns Fitbit, have sought to incorporate blood oxygen readings into the latest watches.

Apple said Tuesday that its new top-of-the-line watch uses a sensor to shine light on blood vessels in the wrist and, combined with algorithms, calculates the color of blood to enable a reading of oxygen levels. The data can be produced in 15 seconds, the company said.

Despite the potential for the watch and iPad, the market remains focused on the next generation of iPhones, for which analysts predict enormous growth opportunities.

Almost 40% of the 950 million iPhone customers haven't upgraded to a new device in the past 3 1/2 years, said Dan Ives, an analyst for Wedbush Securities. He and others are betting the anticipated first offering of a 5G-capable iPhone might lead customers to replace those older devices.

"I believe it translates into a once-in-a-decade type upgrade opportunity for Apple," Mr. Ives said. He called today's event "the drum roll to the main event."

Write to Tim Higgins at Tim.Higgins@WSJ.com

(END) Dow Jones Newswires

September 15, 2020 17:21 ET (21:21 GMT)

Apple (NASDAQ:AAPL)
Historical Stock Chart
From Mar 2024 to Apr 2024

Apple (NASDAQ:AAPL)
Historical Stock Chart
From Apr 2023 to Apr 2024