Apple Inc.'s debut of its redesigned iPhone will test anew its high-stakes strategy of once-a-year upgrades for a product that accounts for about 70 percent of the company's profits.
The new phone, to be introduced Wednesday by Chief Executive Tim Cook, will probably have a new hardware design, including a bigger screen and thinner body, as well as new mapping software and compatibility with speedier next-generation data networks. Analysts predict the iPhone may be among the biggest consumer-electronics releases in history. Still, Apple's reliance on the device leaves Cook little margin for error.
"The iPhone is the make-or-break product for Apple," said Sarah Rotman Epps, a mobile-phone industry analyst at Forrester Research. "Apple has the undeniable lead, but to stay on top they need to keep innovating."
Apple could sell as many as 10 million iPhones by the end of September alone, according to Gene Munster, an analyst at Piper Jaffray & Co. By contrast, it took Samsung about 50 days to sell 10 million of its flagship Galaxy S III smartphone.
"Until they do something really unimpressive, which I don't see happening this time around, Apple has a serious hit on its hands," said Ramon Llamas, senior research analyst at IDC.
Almost one year removed from the death of Apple co-founder Steve Jobs, the newest iPhone faces a growing army of competitors looking to grab a piece of a smartphone market that Bloomberg estimates was worth $219.1 billion last year. Samsung, Motorola, Nokia and HTC are among those taking aim at Apple by introducing dozens of new devices each year, instead of just one.
The new iPhone will be Apple's first change to the handset's hardware design since 2010, raising anticipation among customers who have been holding off on buying a new smartphone.
The company garnered 43 percent of its $108.2 billion in sales last year from the iPhone. And because wireless carriers such as AT&T Inc. and Verizon Wireless subsidize the roughly $620 Apple gets for each iPhone sale, the device accounts for about 70 percent of its profits, according to Sanford C. Bernstein & Co. IPhone sales last quarter alone reached $16.2 billion, 33 percent higher than Google Inc.'s total sales and almost as much as Microsoft Corp.'s $18.1 billion.
Apple's new iPhone could contribute as much as a half a percentage point to U.S. economic growth in the fourth quarter, according to analysts at JPMorgan Chase & Co.
IPhone sales also are what investors watch the most closely. Apple's shares fell in July after the company reported disappointing sales of the handset. The shares have since recovered ahead of the new iPhone release, gaining 64 percent so far this year. They fell less than 1 percent to close at $660.59 on Tuesday.
"A lot is riding on this," said Chris Jones, an analyst at market-research firm Canalys. "They have to make sure it's as good as people expect."
