Cupertino, California: Apple Inc introduced its largest iPhone ever and a new line of watches that can detect heart problems on Wednesday as it looks to get users to upgrade to more expensive devices in the face of stagnant global demand for smartphones.
The relatively small changes to its lineup, following last year's overhauled iPhone X, were widely expected by investors, who sent the company's shares down 1.5 per cent.
The strategy has been successful, helping Apple's stock up more than 30 pct this year and making it the first publicly traded US company to hit a market value of more than $1 trillion.
"It is pretty consistent with past iPhone release days where we see short-term sell the news but things will probably get a lot better in the weeks and months ahead, particularly with a strong holiday sales season expected," said Jake Dollarhide, chief executive of Longbow Asset Management.
Apple's new phones are the XS, with a 5.8-inch (14.7-cm) screen, starting at $999, and the XS Max, the largest iPhone to date and one of the biggest on the market, has a 6.5-inch (16.5-cm) screen, and starts at $1,099.
The company uses the 'S' suffix when it upgrades components but leaves the exterior of a phone largely the same. Last year's iPhone X - pronounced "ten" - represented a major redesign.
It also introduced a lower-cost 6.1-inch (15.5 cm) iPhone XR made of aluminium, starting at $749.
With two phone models starting at $999 or higher in the United States, Apple appears to be taking advantage of a strong US economy, low unemployment, and rising household wealth. The median US household income rose for a third straight year in 2017 to the highest on record since 1967 by one measure, government data showed on Wednesday.
Medical device market
Looking for ways to lessen reliance on phones, which represent more than 60 percent its revenue, Apple opened its event by announcing the new Apple Watch Series 4 with edge-to-edge displays, like its latest phones, and they are more than 30 percent bigger than displays on current models.
It is positioning the new watch as a more comprehensive health device, able to take an electrocardiogram to detect an irregular heartbeat and start an emergency call automatically if it detects a user falling down, potentially appealing to older customers.
The US Food and Drug Administration said it worked with Apple to develop apps for the Apple Watch and has been taking steps to ease the regulatory pathway for companies seeking to create digital healthcare products.
As many as 6.1 million Americans have atrial fibrillation, a heart disease involving irregular heart rhythm for which the Watch could offer an early warning. That number is expected to double by 2050 as the population gets older, according to the American Heart Association.
"This does have a lot of potential for patients," said Dr. Michael Valentine, president of the American College of Cardiology and a cardiologist at Central Health in Lynchburg, Virginia. "Clinicians face patients every day with palpitations, rapid heart rates, and other symptoms," and the doctors want a more portable monitoring and recording system.
BMO Capital Markets analyst Joanne Wuensch added that physicians would be unlikely to make medical treatment based on data from the watch, though it could encourage patients to see cardiologists.
Healthcare technology analyst Ross Muken at Evercore said many companies were developing monitoring devices. "This update really establishes the company’s increasing efforts to push the watch as a serious medical device," he said of Apple.
Shares of fitness device rival Fitbit Inc fell 6.9 percent after the Series 4 announcement on Wednesday.
Apple's event was held at the Steve Jobs Theater in its new circular headquarters in Cupertino, California, named after the company's co-founder who wowed the world with the first iPhone in 2007.
Executives made no mention of a wireless charging mat, or content deals for Apple TV, as some industry analysts had expected.
"We all knew this was going to be a transitional but not transformational phone update," said Trip Miller, managing partner at hedge fund Gullane Capital, which owns Apple shares.