user

Apple to reveal streaming service prices while iPhones on 'holding pattern' until 5G

(Reuters) – Apple Inc (AAPL.O) is set on Tuesday to announce pricing for its forthcoming streaming TV service as well as updates to its iPhone lineup, as the tech giant reaches a turning point where it focuses as much on services as its hardware and software. FILE PHOTO: A demonstration of the newly released Apple products is seen following the product launch event at the Steve Jobs Theater in Cupertino, California, U.S. September 12, 2018. REUTERS/Stephen LamThe annual upgrade to the iPhone is expected to include new camera features but few big changes, with Apple in a “holding pattern” until it rolls out 5G phones with faster mobile data speeds next year, analysts said. Instead, services like the television content featuring the likes of Oprah Winfrey that will compete with Netflix Inc (NFLX.O) and Walt Disney Co (DIS.N) could take center stage. While the iPhone still makes up more than half of Apple’s sales, Tuesday’s event may nudge it off center stage after a decade in the limelight. Apple long boasted about its competitive advantage over rivals such as Samsung Electronics Co Ltd (005930.KS), which makes handsets, or Alphabet Inc’s Google (GOOGL.O), which provides the Android operating system for most of the world’s phones. Apple touted controlling both the hardware and software, resulting in polished products that commanded premium prices and captured most of the smart phone industry’s profits. But at the fall event at 10 a.m. PT (1700 GMT) in the Steve Jobs Theater in Cupertino, California, typically Apple’s splashiest and dedicated to its flagship devices, Apple is cementing a third element to its focus: hardware, software and services. The new strategy, which Apple hinted at an event in March where it gave some details about the streaming TV service, comes as iPhone sales have declined year-over-year for the past two fiscal quarters and investors are fixed on the growth potential for services. Questions about how Apple will price its television service, and whether it will bundle it with its streaming music products, will weigh on the minds of Wall Street and analysts just as much as whether the Apple TV hardware box gets an upgrade or how many cameras the iPhone has. Apple has not yet given a specific launch date or price. “This is the first time we’ll get to see Apple’s strategy with all three parts of the business,” said Ben Bajarin, an analyst with Creative Strategies. With streaming content, Apple is entering a crowded field. Since Apple’s initial television event in March, rivals like Walt Disney Co (DIS.N) have since announced a $6.99 per month service that will contain that firm’s iconic children’s content. With no historic library of television content of its own, Apple will sell its own service – Apple TV+ – even as it already serves as a reseller of other channels like HBO and, analysts believe, takes a cut of sales. Bajarin said Apple’s challenge is to persuade consumers that its family of devices, from its set-top box to phones, are the best one-stop place to watch shows, despite the fact that Netflix has yet to come on board with the integrated viewing system. (Netflix remains available as a standalone app on Apple devices, and its shows appear in search results in the Apple TV app.) “Netflix is sort of gaping void” in the Apple TV app “but they’ve got Amazon and all the channels on board,” Bajarin said. “The vast majority of content providers are playing nice with Apple TV.” Apple is also likely to unveil updates to the iPhone and Apple Watch. Analysts expect the iPhone to feature better cameras, and perhaps new chips to help handle the work of sensors on the device, but few new blockbuster features. Those are not expected until next year, when Apple is expected to have a 5G device capable to taking advantage of faster mobile data networks. “I believe we are in an incremental holding pattern until 5G. Customers with iPhone X and beyond likely won’t have a reason to upgrade,” said Patrick Moorhead of Moor Insights & Strategy. In terms of pricing, most analyst expect prices to remain unchanged from the last year’s models, between $749 and $1,099 depending on size and features. Apple makes much of its profits on selling memory upgrades to devices with larger storage capacity, and Moorhead said falling memory chip prices could help Apple absorb the cost of tariffs on Chinese-made goods, which are expected to hit mobile phones starting Dec. 15. “Thankfully storage and memory prices have declined so instead of taking more profit, I see Apple eating the cost and not raising prices,” Moorhead said. “I can also see Apple leaning heavily on its supply chain to eat some of the cost.” Reporting by Stephen Nellis; Editing by Lisa ShumakerOur Standards:The Thomson Reuters Trust Principles.

Recovery first: for next Nissan CEO, priority is profit before Renault partnership

TOKYO (Reuters) – The next head of Nissan Motor Co will need to prioritize a recovery in profits at the troubled Japanese firm ahead of trying to fix its relationship with top shareholder Renault SA, executives and analysts say. FILE PHOTO: A Nissan logo is pictured during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. REUTERS/Aly Song/File PhotoReviving earnings would strengthen the carmaker’s hand in negotiations with its French partner, and is something Renault itself would welcome as the owner of a 43.4% stake in Nissan. Japan’s second-largest automaker said on Monday CEO Hiroto Saikawa would step down on Sept. 16 after he admitted to being overpaid in breach of company rules. It’s another heavy blow for Nissan, which is already reeling from the arrest of former chairman Carlos Ghosn last year and a subsequent plunge in earnings. Its stock is down 20% this year. For Saikawa’s yet-to-be-named replacement, the top priority will be lifting profits from a more than decade low. Earnings have been undercut by years of heavy discounts and low-margin sales to rental firms that have cheapened Nissan’s brand image. Renault, which has unsuccessfully sought a full-blown merger with its larger partner, is likely to give the Japanese firm time to focus on its turnaround, a Nissan executive said. “It goes without saying recovery is the biggest priority,” the executive said, declining to be identified because the information is not public. “We have Renault’s understanding on that.” Tensions in the Nissan-Renault partnership worsened after Ghosn’s arrest. He is awaiting trial in Tokyo on financial misconduct charges that he denies. The strain has sparked investor concern about the future of the Franco-Japanese automaking alliance at a time when car companies desperately need scale to keep up with sweeping technological changes like electric vehicles and ride-hailing. Nissan executives have long complained about their unequal partnership with Renault, which saved the Japanese firm from bankruptcy in 1999. Nissan holds a 15% stake in Renault, but without voting rights. Tokyo is also seen as being uneasy about the French government’s 15% holding in Renault, which makes Paris an indirect shareholder in Nissan. “Profitability is likely to remain under pressure and it (Nissan) is unlikely to promptly reach an agreement with Renault over the future shape of the alliance,” analysts at Standard & Poor’s said in a note. BOTTOM LINE Tensions worsened when Renault tried to in vain to merge with Nissan and then Fiat Chrysler. Both Renault Chairman Jean-Dominique Senard and the French government may now have to hold off on their expressed desire for stronger ties with Nissan. “It’s also in the French government’s interest for Nissan to improve its bottom line,” Janet Lewis, head of Asia transportation research at Macquarie Securities. “Renault’s share price is going to benefit much more from a healthy Nissan than any kind of merger agreement.” COO Yasuhiro Yamauchi will take over from Saikawa next week on an interim basis as a newly created nominations committee will recommend a successor by the end of October. Possible candidates include Nissan veteran Jun Seki, and Makoto Uchida, who currently head’s the automaker’s China operations. Two key tasks for the new CEO will be to see through Nissan’s recovery strategy in the United States, where it is trying to stop flooding the market with discounted cars, and execute plans announced by Saikawa in July to cut excess production at its global plants. Saikawa on Monday suggested that his plan to improve U.S. profit by producing higher-quality cars while weaning dealers off of sales incentives was already paying off, and that signs of recovery would be evident at first-half results next month. The new CEO will also oversee a cut of around one-tenth of Nissan’s global workforce – its deepest job cuts since 2009 – and slash production capacity, shuttering underutilized plants built as part of Ghosn’s aggressive growth strategy in 2011 to grab 8% global market share. While steep, the challenges facing Nissan now are different from 1999, said Macquarie’s Lewis, referring to the time when Renault rescued the automaker from the brink bankruptcy and dispatched Ghosn to overhaul the Japanese company. “Nissan has a very strong balance sheet, it has a very profitable business in China. They have some problems in the U.S. but they’re not insurmountable,” she said. “This is not a 1999 situation where Nissan needs to be rescued.” Reporting by Naomi Tajitsu; Additional reporting by Norihiko Shirouzu; Editing by David Dolan and Mark PotterOur Standards:The Thomson Reuters Trust Principles.