By Tim Higgins
Apple Inc. unveiled a new iPhone Tuesday capable of connecting to a much faster 5G cellular network, which investors are betting will spur strong demand.
Chief Executive Tim Cook stood at the company's Cupertino, Calif., headquarters to begin the webcast, available on Apple's website -- a visual reminder of how the tech giant's latest flagship-product introduction differs from previous ones because of the coronavirus pandemic, which closed businesses and left people sheltering at home around the world for much of this year.
The iPhone 12 offered a new physical appearance from last year's smartphone, moving from rounded edges to a flatter look.
The greatest hype going into the event, however, has been about the device's 5G capability. Apple's adoption of the next-generation wireless standard places intense focus on the new technology that has been years in the making. Cellular network carriers have been scrambling to roll out 5G service across the U.S., but coverage remains spotty in the country and it isn't clear yet whether customers will want it.
"Today is the beginning of a new era for iPhone," Mr. Cook said.
With few people familiar with the new cellular service, Apple tried to describe why the new technology would improve their experience with faster internet connection, video gaming and integration with the company's new A14 Bionic microchip.
The emphasis on the guts of the iPhone marked a change from recent years where many new features involved cameras and other iterative updates. The lack of dramatic change has come as the smartphone market has matured more than a decade after Apple first introduced the iPhone.
The latest smartphone arrives five years after iPhone unit sales peaked. Mr. Cook has pushed the company to sell pricier versions of the device and to rely on software services and wearables, such as smartwatches and headphones, to boost revenue.
The iPhone 12 is hotly anticipated by investors who have driven up the company's shares 69% in 2020, partly because of excitement over the new phone. Those expectations and Apple's success in driving up services revenue helped it become the first U.S. public company to eclipse $2 trillion in market value earlier this year.
Analysts surveyed by FactSet, on average, predict iPhone revenue will rise 15% to $160 billion in the fiscal year that began Oct. 1. That is about $6 billion shy of the record set in fiscal 2018, when the $1,000 iPhone X helped bolster sales even as shipments failed to reach a new high.
Katy Huberty, a veteran Apple analyst for Morgan Stanley, last week predicted the company could ship as many as 240 million iPhones this year, helped by customers who haven't upgraded in several years and excitement for 5G. That would set a record, beating the 231 million devices sold in fiscal 2015. Sales at that level could send the company's shares up 37% from Monday's close to a market value of almost $2.9 trillion, she said.
"We expect this fall's launch to be the most significant iPhone event in years," she wrote in a note to investors.
Apple is expected to offer several versions, including with three differently size screens ranging from 5.4 inches to 6.7 inches.
In recent years, Mr. Cook has been stretching the iPhone lineup to appeal to an array of pocketbooks. The iPhone 11 Pro Max, with the largest 6.5-inch screen, for example, started at $1,099, while the high-end smaller Pro version with the 5.8-inch screen started at $999. The iPhone 11 with a 6.1-inch screen and fewer photography capabilities than higher-end models began at $699. A second-generation iPhone SE with a 4.7-inch screen was unveiled earlier this year and starts at $399.
Some analysts, however, are skeptical that customers will flock to a 5G phone without a must-have application or service to help them see the appeal of the new technology. U.S. cellular networks are still being upgraded, and service might be disappointing in some spots for early adopters.
It is also uncertain how the coronavirus will affect sales of the new devices. The pandemic delayed production of the flagship phone earlier this year, which led Tuesday's unveiling to be rescheduled from its traditional September date.
Mr. Cook will appear publicly for the first time since a Democratic-led House subcommittee last week issued a report claiming Apple uses its control over software on its devices in an anticompetitive manner. Apple has rejected the report's conclusions and said it doesn't have a dominant market share in any area.
The company began its Tuesday event by introducing an updated HomePod that is smaller than its previous version of the speaker and is priced at $99.
Apple began selling the HomePod in early 2018 after unspecified delays pushed back the rollout following its 2017 debut. The voice-activated device was Apple's attempt to catch up with the success of Amazon.com Inc. and its smart speakers in late 2014, though when the HomePod debuted at $349 it was considerably more expensive than its rivals.
To make the case for a pricier offering, Apple has previously emphasized its sound quality, especially when it comes to music. The device's price has fallen since it first went on the market.
Write to Tim Higgins at Tim.Higgins@WSJ.com
(END) Dow Jones Newswires