If you have a big, red circle on your calendar with a friendly reminder about Wednesday and Apple Inc. (AAPL), you’re not alone.
Every September around this time, Apple throws a soiree to announce a few new products, but always front and center is the latest iteration of its iconic iPhone. This year, that date is Sept. 7. And this year, those iterations are the iPhone 7 and the iPhone 7 Plus.
Apple lovers and technophiles will be locked into Wednesday’s event, sure. That’s a given. But seeing as how AAPL is one of the most watched companies (if not the most watched company) on the market, and America’s largest stock by market capitalization — giving it an outsized effect on hundreds of hedge, mutual and exchange-traded funds — well … you can bet Wall Street will be pretty interested too.
In particular, investors who are long on Apple stock will be hanging on each word. That’s because Apple is in the red since May 2015 and is underperforming the broader market so far this year. That’s also because iPhone sales have declined in two consecutive quarters, which is particularly worrisome given that the iPhone accounts for well more than half the company’s revenues.
[Read: Tesla Motors Inc (TSLA) Should Imitate Apple Inc.’s Naming Strategy.]
Naturally, those longs will be looking and waiting for something. Here are three things investors probably want to see out of the iPhone 7 … and whether they’re likely to see it:
Water resistance. The iPhone 7 is expected to include many upgrades, several of them meaningful. For instance, KGI Securities (via 9to5 Mac) says the iPhone’s memory is going to get a long-needed upgrade on the low end, from 16 GB to 32 GB. (Have you ever deleted photos or apps to have enough storage to install the latest iOS update? Yeah, you’re smiling right now.) This upgrade simply addresses the reality that 16 GB is inadequate anymore, even for base-level iPhone users. Serial picture-takers and audio hoarders still will have to pay up for more storage, either via the phone itself or iCloud.
But water resistance might be the best improvement Apple makes.
That same report, from KGI’s Ming-Chi Kuo — a respected name in the Apple tech analysis game — says the iPhone 7 will be more protected now. MacRumors’ roundup says the iPhone 7 will have “Improved IPX7 water resistance matching that of the original Apple Watch and making the device suitable for splashes, showering, and even brief dips in water up to 1 meter deep.”
A few Samsung phones boast water protection — something you probably already know thanks to Li’l Wayne’s unforgettable champagne showers for the Galaxy S7 Edge. Sony Corp. (SNE) also makes a couple of water-resistant phones via its Xperia line. Heck, Caterpillar (CAT) Cat Phones are waterproof to 5 meters.
Smartphones aren’t luxuries now. They’re necessities. Many people put their entire lives into their smartphones. Thus, we need smartphones that are increasingly durable against anything they might come up against in a lifetime of heavy use.
Apple needs (and is expected) to get itself on par on this front before water resistance becomes a major selling point that sends would-be buyers to Apple’s rivals.
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The headphone jack. Most consumers might grouse if Apple finally removes the headphone jack from its iPhones, but investors should welcome it.
For months, rumors have abounded concerning whether Apple would ditch the headphone jack. Product certifications for “AirPods” (via MacRumors) and possible leaked plans to launch new Beats headphones along with the iPhone 7 (via France’s iGen) further cement this fear.
Naturally, this would irk many users, as Apple’s EarPods and other wired headphones work fine not just with the iPhone, but laptops and other devices. But it looks like Apple is going to head that off by the pass by including new Lightning-connected EarPods and a 3.5mm converter in packaging. That might sound like a missed money grab opportunity … but wait, there’s more.
For one, MacRumors discovered Eurasian Economic Union certification for so-called “AirPods” — higher-priced wireless Apple earbuds that likely will not be bundled with the new iPhone 7. Moreover, there’s the aforementioned iGen leak that implies Beats — which is now owned by Apple — will try to capitalize with new offerings of its own, no doubt tailored to the changes in audio input.
Lightning audio does have its upsides, too, including better sound quality. Plus, Apple can make its iPhones thinner without the headphone jack, and it makes water-protecting the device easier.
In short, Apple is making improvements while disturbing an iPhone mainstay, and positioning itself to tout new, pricy audio equipment to usher in this change.
A game-changing iPhone. If the rumors and leaks are true, the iPhone 7 is going to be better in many ways. Better cameras, better storage, better RAM (for the iPhone 7 Plus, says DigiTimes) and better protection from the elements. You could even argue that, if the headphone jack rumors are true, this iPhone will be “different.”
And at the end of the day, if those upgrades and differences are enough to get hordes of current iPhone users up off their couch and into Apple Stores, that’s all that really matters if you hold AAPL shares.
But the ghost of iPhone future might be enough to keep people on the sidelines.
Apple is changing its product launch cycle to every three years from two, which means we’re not going to see a truly major design change until next year. The Wall Street Journal reports that those changes “could include an edge-to-edge organic light-emitting diode, or OLED, screen and eliminating the home button by building the fingerprint sensor into the display, according to people familiar with the matter.” Waterproofing likely would be better without a home button, the screen could be bigger and better, and it’ll almost certainly have Lightning audio, too. Thus, many would-be buyers might try to hold off just one more year.
Sure, not everyone has that option. Many iPhone 6 Plus users suffering from “touch disease” — a defect involving a flaw in the touch screen — will probably want to upgrade. Heck, even Apple itself says its iPhones have an expected lifespan of three years — so right now, there’s a natural roll-up of people who own iPhones with increasingly nagging problems just waiting to upgrade.
[See: The 10 Best Ways to Buy Tech Stocks.]
But “the next big iPhone” isn’t coming this year, just “the next iPhone.” So investors can only wait and hope that the iPhone 7 will be appealing enough to stir up a buying frenzy like the iPhones of yore.
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3 Things to Look for From Apple Inc. and the iPhone 7 originally appeared on usnews.com
