Apple to Hold Product Launch Event on Sept. 12 -- Update

By Tripp Mickle and Drew FitzGerald Features Dow Jones Newswires

Apple Inc. has scheduled a product announcement event on Sept. 12, according to people briefed on its plans, reinforcing expectations that the technology giant will release new iPhones and a smartwatch well ahead of the holiday shopping season.

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The company is expected to unveil three iPhones, according to other people familiar with its plans. Those include a showcase iPhone to mark the product's 10th anniversary that is larger and pricier and features an edge-to-edge display and facial-recognition technology, as well as updates to the two iPhone 7 models that started selling last year.

Analysts had widely reported in recent months that production glitches on the newest iPhone could cause it to be delayed. If the event proceeds on Sept. 12, its timing would be roughly consistent with iPhone launches in previous years, reassuring investors and customers that the device is on track.

Still, it remains to be seen if production shortfalls like those that constrained supplies of the iPhone 6 will crimp sales of the latest handsets. Apple typically begins selling new iPhones about 10 days after unveiling them.

In the past two years it has used San Francisco's Bill Graham Civic Auditorium, but people close to the company say it is aiming to use the 1,000-seat Steve Jobs Theater on its new headquarters campus. That headquarters, however, isn't yet finished, and its construction timetable could affect the timing or location of the event, those people said.

Apple declined to comment. It often keeps secret the timing and other information about such events until close to the date.

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Apple's announcement is scheduled to happen a week after sales start in the U.S. for Samsung Electronics Co.'s Galaxy Note 8. The South Korean company's flagship smartphone features a new dual-lens camera similar to the iPhone 7 and one of the largest smartphone screens on the market. Samsung hopes the device convinces some iPhone owners to switch.

Apple has increased production in recent weeks of the new, showcase iPhone and is poised to expand manufacturing from one plant in China to others, according to people familiar with the process. The expansion bodes well for the company's efforts to meet sales demand for the device during the holiday shopping season, one of the people said.

More iPhone users are due for an upgrade today than ever before. In a recent consumer survey, 52% of people planning to buy a smartphone in the next 90 days said they would buy an iPhone, the highest level since 2010, according to 451 Research, a market-research firm.

Expectations for strong sales of the new iPhones have sent Apple's stock to record levels and increased its market cap by 36% to $825.71 billion since the start of the year. The company said this month that it expects to generate $49 billion to $52 billion in sales during the September quarter, a figure Nomura Instinet analysts say suggests Apple will ship about 50 million iPhones in the quarter, a 10% increase from the same time last year. Other analysts estimate Apple will ship fewer iPhones.

"This is a game changer because of the new functionality that will really strengthen ties with consumers," said John Koczara, senior portfolio manager at LaFleur & Godfrey, a Grand Rapids, Mich.-based investment firm that counts Apple among its largest holdings. "Not only domestically will it move the needle, but it will also really take share in China and move the needle once again there."

Apple also is expected to unveil a new Apple Watch with an LTE cellular chip that allows it to pull data directly from wireless services, easing the device's current dependency on the iPhone to transmit emails, texts and calls.

The new iPhone is expected to feature facial recognition technology that allows users to unlock the device, and to have augmented-reality capabilities, according to Carolina Milanesi, an analyst with market-research firm Creative Strategies. She said the facial-recognition feature will make Apple Pay faster, while augmented-reality apps will create opportunities to use the device in new ways such as gaming or decorating a home.

"There's going to be enough in this phone to lay the foundation for the future of computing as Apple thinks about it," said Ms. Milanesi, who said previous iPhone updates were more "iterative."

The iPhone's success will hinge largely on its performance in China, said Katy Huberty, a Morgan Stanley analyst. Apple has been losing market share in China to local, low-priced rivals like Huawei Technologies Co. and BBK Electronics Corp. Sales declined 16% in Greater China, which includes Hong Kong and Taiwan, in the 12 months through June.

Investors hope the new high-end iPhone reverses those declines because it is expected to look different from previous models. Many Chinese consumers treat their devices as status symbols, analysts say, and haven't upgraded in recent years because the iPhone 7, released last September, looked the same as the iPhone 6 and iPhone 6s that preceded it.

To boost sales, though, Apple will have to persuade consumers to pay more for the new high-end model, which analysts expect to cost as much as $1,000, with higher-memory versions priced at as much as $1,400. That starting price would be more than 50% higher than the base price of the current iPhone 7.

"People will come in and look at the new model and lust after it, but their wallets will ache and they'll say, 'I just can't do that,'" said Roger Kay, an analyst with Endpoint Technologies Associates, who expects many consumers to choose the iPhone 7s or 7s Plus estimated to cost $650 and $750.

But to sell those devices, Mr. Kay said Apple will need to pack the handsets with enough distinguishing features to make them appear like an upgrade to current iPhones.

--Joann S. Lublin contributed to this article.

Write to Tripp Mickle at Tripp.Mickle@wsj.com and Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

August 28, 2017 10:27 ET (14:27 GMT)