By IAN SHERR And MATT JARZEMSKY
Apple Inc. invited reporters to an iPhone-related event Oct. 4, setting the stage for the widely anticipated launch of its latest smartphone.
On Tuesday, Apple sent reporters an email with the message, “Let’s talk iPhone,” inviting them to an event at its Cupertino, Calif., headquarters. Apple has traditionally held an event in the early fall to update iPod products, as well as its iTunes digital music jukebox software.
Apple shares recently were up $2.14 at $405.31.
“The company will likely announce a redesigned iPhone 5 with a larger screen and thinner form-factor for $199/$299, and may drop the iPhone 4 to $99, possibly with slightly upgraded components and a new name, iPhone 4S,” Piper Jaffray analyst Gene Munster said in a note Tuesday.
He added that the invitation’s phrase of “Let’s talk iPhone” may “refer to new speech-based features for the iPhone.”
Mr. Munster, who rates Apple at outperform with a $607 price target, estimates sales of 25 million iPhones in the December quarter. He noted that demand from Verizon Wireless subscribers could be strong because iPhone 4 had been available on other carriers for more than six months when the carrier got it in February.
The event next week follows what analysts say has been a blowout quarter for Apple’s iPhone 4. The device, which was released in June 2010, has been a hit with consumers despite initial customer complaints that the device’s antenna was prone to malfunctioning when held a certain way.
Overall, the iPhone has helped to drive Apple’s revenue and profit growth to record levels and has become the best-selling smartphone in the world.
Despite its high ranking, however, the iPhone’s sales pale in comparison to the mountain of devices sold around the world that are powered by Google Inc.’s Android operating system. The software, which powers phones made by Samsung Electronics Co. Ltd., HTC Corp. and Dell Inc., is used by 43% of U.S. smartphone subscribers, according to the latest surveys by Nielsen. The iPhone, by comparison, represents 28%.
Still, analysts expect the new iPhone will likely follow a similar path of success as its predecessor, drawing enthusiastic customers to its stores on its release day.
“We believe a refreshed iPhone 5 will boast enough physical improvements to drive another strong adoption cycle,” UBS analyst Maynard Um wrote in a note shortly after the invitation was sent. He added that demand for the phone had likely built up because Apple took 16 months to refresh the line rather than the typical 12 months.
Mr. Um has a buy rating on Apple shares and a $510 price target. While Apple’s next-generation iPhone is expected to be a success with customers, the device’s arrival comes at an unusual time for the company. Steve Jobs, Apple’s co-founder and leader, stepped down on Aug. 24 after a prolonged medical leave for an undisclosed illness.
Mr. Jobs, a pancreatic cancer survivor, was succeeded by Tim Cook, then the company’s chief operating officer. Mr. Cook is widely respected among his peers in the industry and employees who report to him. Several Apple employees say the company has not changed since Mr. Cook took the helm, and that the enthusiasm among employees remains strong.
The event also comes as interest in the company’s iPod continues to wane.
Released in 2001, the digital music player became a centerpiece of Apple’s renaissance, powering the company’s surge last decade. Recently, however, its sales have been falling. Apple said iPod unit sales fell by a fifth in its third quarter when compared with the same time a year ago.
Apple’s invitation suggests that the iPod will take a back seat to the iPhone at the event, underscoring a shift in customer’s interest of Apple’s products.