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Apple plays catch-up to Android with 2 new phones and smart watch

Apple Watch.

After weeks of intense speculation about exactly what Apple would announce at this event, CEO Tim Cook finally took the stage at the Flint Centre for the Performing Arts in Cupertino and settled the score. Even so, it came as quite a shock though at how accurate the leaks had been.

Two new phones

Cook and other Apple executives presented the details of two new versions of the iPhone. The 4.7 inch iPhone 6 and the 5.5 inch iPhone 5.5 plus. The phones will be powered by a new chip, Apple’s own A8 processor, which will deliver a performance and graphics boost over the iPhone 5S. The phone also come with better camera, new sensors and yes, as predicted, the long awaited NFC chip!

A new payment system

The NFC chip will work with a new payment system launched by Apple called Pay that will allow users to add credit cards to their iTunes account and use the phone to tap and pay where this is supported. The finger scanner built into the phone is used at the same time for security and Apple has used a special mechanism which transmits one-time codes for the payment instead of card’s details making the transaction itself more secure. As with Android NFC payment systems, the cards can be disabled remotely if the phone is lost.

The added security around the payment system is a welcome announcement. After the hacking of celebrities’ photos from iCloud in the past week, Apple will need to reassure customers that it really can protect access to their personal finance. The addition of fingerprint scanning to the payment system will also set the bar a little higher for Google and Android manufacturers like Samsung who currently don’t require this additional protective measure.

Pay will launch in the US with support for Mastercard, Visa and American Express and support from a range of merchants. It will be interesting to see however whether this now spurs other merchants into adopting contactless payments which is yet to be as widespread in the US as it is in countries like Australia.

iOS 8

The new iPhones will launch with iOS 8 which will be available for download on September 17th. iOS 8 was previously announced at WWDC in June, and its release will now properly launch Apple’s new mobile health (HealthKit) and home automation (HomeKit) frameworks presumably with many products that integrate these frameworks to follow.

Apple Watch

And then came the announcement of the Apple Watch. Although it is quite attractive, on first sight, it is not that radically different in overall design to any of the watches that have already been released by Samsung, LG and Motorola. Apple has created a range of different straps for the phone which itself comes in 3 different sizes.

The most notable features is a button called the Digital Crown on the side that acts as a Home button and looks similar to the old fashioned winding mechanism on a regular wrist watch.

The phone is powered by an S1 chip and has various sensors including a gyroscope and accelerometer built in along with sensors that can detect a wearer’s heart rate. These sensors will drive the activity tracking capability of the watch. The watch will be available next year and the price will be $349 in the US which caused a very much less enthusiastic response in the audience when announced. This price makes it more expensive than other smart watches available.

The reaction

The market initially reacted with an a 5% jump in Apple’s share price on the announcements of the new phones but dropped back as the event covered the details of the new watch. It is hard to read too much into this reaction as previous launches of Apple’s iPhones have had unpredictable responses in the market.

Ultimately, there are too many variables that influence whether the new phones and watches will boost Apple’s revenues and profits enough to please market analysts. Even though these phones and watch are expected to be popular, the market is reaching maturity in most parts of the world, with far more competition in the rest.

The other thing to consider is that the phones and watch are essentially again responding to what is already in the market from other companies. Although Apple’s new products will help the overall market for wearables and mobile payments, there main role is to bring Apple customers products that are already available to Android users.

The reaction to Apple’s products will likely be split along technological partisan lines. Apple users will be excited, Android users will be happy that they are not missing out on anything significant.

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