Apple shares increased by 1.3 percent a day after the launch of the highly expected iPhones and Apple Watch – the first new product introduced by Chief Executive Tim Cook who noted that most consumers and businesses still rely on a “fairly antiquated payment process,” and one that isn’t as secure as many would hope.
“We’re totally reliant on the exposed numbers,” Cook said in the presentation, “and the security codes that all of us know aren’t secure. It’s no wonder that people have dreamed of replacing these for years. But they’ve all failed.”
“At least six brokerages raised their price target on Apple’s stock by as much as $16 to a high of $116, but there was also a rare downgrade to the stock”, Reuters writes. “Many on Wall Street hailed Apple Pay – the company’s new wireless payment system – with Piper Jaffray’s Gene Munster calling it the “star of the show” at Tuesday’s gala launch.”
The new system was created to allow iPhone 6 and 6 Plus users to pay for goods using their American Express Co, Visa Inc or Mastercard Inc bank cards.
Samsung Electronics Co Ltd, Motorola Mobility and others have similar wireless technology in many Android smartphones. But with payment systems such as Google’s Wallet failing to catch on, the technology is not standard in handsets.
“On the mobile payments front, we believe the company made a major breakthrough and cracked an important and vexing issue that has plagued the industry for several years regarding customer ownership,” William Blair analysts wrote in a note.
Tim Cook, who has been Apple CEO since 2011, got under pressure as he was expected to launch new services and come up with larger-screen phones to beat the company’s rival Samsung’s popular Galaxy Note phablets.
Worldwide market share of iPhones, which contribute more than half of Apple’s revenue, slipped to 11.7 percent for the quarter ended June from 13 percent a year earlier, according to research firm IDC.
“Apple Pay is a feature that should help sell Apple products and provide some small help to the bottom line,” BMO Capital Markets analysts said.
However, Andy Hargreaves, analyst at Pacific Crest, told reporters that growth potential from the just unveiled larger-screen device was largely priced into Apple’s shares. He cut his rating to “sector perform” from “outperform”, becoming the first analyst since May to downgrade the stock.
Apple Watch, the company’s first new product since the iPad, available in two sizes and in a variety of different styles, allows users to receive and send text messages, take calls and monitor your health and fitness throughout the day, all from your wrist.
The price starts at $349 and will launch early next year. It will also work with smartphones as far back as the iPhone 5.
“We’ve been working on Apple Watch for a long time,” Tim Cook told attendees at the company’s iPhone 6 launch event in Cupertino, California on Tuesday. “It’s the most personal device we’ve ever created.”