Apple on Tuesday introduced its newest iPhones and its first wearable, the Apple Watch. The new devices have gotten all of the buzz, but many analysts say Apple Pay, the company's new mobile-payments service, could be the real game changer.
They also largely applauded the new devices and said they could drive Apple's biggest year ever.
The Cupertino, Calif., company on Tuesday introduced the iPhone 6 and iPhone 6 Plus, its new, bigger screen smartphones. The iPhone 6 sports a 4.7-inch display, up from the 4-inch screen in the iPhone 5S. The 6 Plus includes a 5.5-inch display, putting it firmly in the category of phablet, or phone-tablet hybrid.
The company also made its first jump into the hot smartwatch market by showing off three designs for its first wearable -- the stainless-steel-cased Apple Watch, the aluminum-cased Apple Watch Sport, and the 18-karat-gold-cased Apple Watch Edition. The smartwatches go on sale early next year at a starting price of $349. The devices must be paired with an iPhone, and are compatible with the iPhone 5, 5C, 5S, 6, and 6 Plus.
After years of speculation, the company also said it was finally including the short-range wireless technology known as near-field communications or NFC into its Apple Watch and iPhone 6 and 6 Plus smartphones. It also announced a new digital wallet called Apple Pay, which can be accessed securely using its fingerprint Touch ID technology. The service allows users to store their credit card accounts on their Apple devices and pay for items by tapping the phone or watch to a sales terminal.
Here's what some analysts thought about the announcements:
Apple Pay could be a game changer
Apple Pay may not have been the sexiest announcement on Tuesday, but many analysts believe it could be the most important.
The company also has an online tie-in that allows users to pay for online items quickly using TouchID. Apple Pay application programming interfaces (APIs) will be available to developers in iOS 8 so they can enable purchasing physical goods within their apps on the iPhone 6 and iPhone 6 Plus.Apple announced Tuesday it's partnering with Visa, MasterCard, and American Express along with several issuing banks to allow iPhone users to store their credit card accounts. Apple Pay will be available in 220,000 US merchant locations that already take mobile payments via the NFC's short range, secure wireless capabilities.
PiperJaffray analyst Gene Munster called Apple Pay "potentially the most important Internet service introduced by Apple since iTunes."
"Overall, we view the offering as significantly more built out than we previously expected in terms of the quality and number of partners as well as the level of integration into the iPhone," he noted. "In the near-term, we believe the more obvious impact of Apple Pay is to drive incremental hardware sales in the iPhone 6. Longer-term, we believe that Apple intends to find specific ways to monetize each payment transaction on platform, which could be achieved through various efficiencies in the system."
Gilles Ubaghs, senior analyst of financial services technology at research firm Ovum, said Apple's entrance into payments "marks a milestone in payments regardless of the eventual outcome of its new services." But he did say it's likely to remain "niche at the point of sale for some time as overall device penetration remains relatively low and the service remains US only."
"More critically the in-store experience provides little major incentive for use at this point, and while Apple benefits from its iTunes membership, the lack of tie in to loyalty or other features may at least initially limit consumer interest beyond early adopters," Ubaghs said.
Apple iPhone 6 and 6 Plus expand Apple's target market
The iPhone is Apple's most important gadget and its biggest moneymaker, accounting for more than half of sales and about 70 percent of profit, according to analysts. For the past three years, Apple CEO Tim Cook has unveiled the new design in the fall, and last year, he introduced two new iPhone models for the first time -- the pricey 5S and the colorful, plastic-encased 5C. He continued that trend on Tuesday, showing off two new iPhones, the iPhone 6 and iPhone 6 Plus.
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