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It's that time of the year again. Apple (NASDAQ: AAPL) is highly likely to introduce the iPhone 7 next month. Reports of a media event in early September, followed by actual retail availability on Sep. 23, have been circulating since the Apple-centric bloggers at 9to5Mac on a leaked merchandise reset at AT&T (NYSE: T) stores last week. It could be anything, but once we get this late into the summer, the chatter starts to become more credible.
There's also no shortage of reports on the rumored features of the new smartphone. The removal of the headphone jack -- owners will have to use either Bluetooth headsets or earbuds that plug directly into the charging port -- could make the device more water resistant. The processor, battery, and camera should all be improved, with chatter suggesting that the larger iPhone 7 Plus will come with for crisper snapshots. Some are suggesting that the iconic home button will be replaced by haptic feedback sensors.
There's also talk about more storage capacity, but the consensus for quite some time has been that Apple is waiting until next year for the next major reset of the iPhone product line. Even a permabull like Piper Jaffray's Gene Munster seems to be conceding that there's just a "small chance" that next month's smartphone proves to be a needle-moving surprise in a new analyst note issued on Friday. His bullish thesis -- and his aggressive $151 price target -- rests more on expectations that next year's update will be the real game changer.
Justifying the recent pop
Shares of Apple have been quietly bouncing back lately. The stock has rallied 22% since bottoming out in May. The bullish sentiment may seem misplaced. Apple went on to post a top-line decline for its recent fiscal third quarter, something that it hasn't done since the June quarter of 2002 according to data. Wall Street pros see a repeat performance for the current quarter with an even sharper decline on the bottom line.
The market may be looking ahead to next year's iPhone 7S or iPhone 8. If it's timed to coincide with the device's 2007 debut -- something that would result in a late June rollout next summer -- it could make the next 12 months pretty special for Apple's financial performance with two smartphone rollouts.
Next year should be special. Some of the chatter involves an entirely new form factor with an all-glass design and a battery life-preserving OLED screen. However, what if the features being introduced in next month's model are enough to spur folks to trade up now.
Crashing the party
AT&T and its wireless-carrier rivals have moved away from two-year contracts on subsidized smartphones. AT&T got tired of discounting new iPhones by as much as $400, making that back in the form of chunky monthly data-plan charges. AT&T and its peers now simply finance the devices over varying lengths of time, but because monthly plans get cheaper after they are paid off, there's less of an incentive to trade up every two years.
It's probably not a coincidence that iPhone sales growth has been sluggish since the country's two largest wireless carriers made last summer. It will take a head-turning iPhone to trigger a massive upgrade; but what if next month's platform is cooler than we think?
The rumored dual-lens camera on the iPhone 7 Plus is a big differentiator from all other smartphones on the market. So many people have lost iPhones to water that a more water-resistant device could spur an upgrade wave, much to the dismay of the industry. The growing popularity of iCloud as a file-hosting platform may seem to make internal storage less important, but super-sizing capacity without an uptick in price will always be an incentive to folks with maxed-out storage.
The argument will be that folks will wait if they know that an even cooler iPhone is coming next year, but isn't that always the case? People still even upgrade during the spring and summer, knowing full well that an update is coming in a few months that will make the device better and the one that they're buying cheaper.
Folks who are discounting next month's debut is what makes its potential so intriguing. The current generation may be a letdown after the bar-raising iPhone 6 hit the market two years ago. That was a hard act to follow, but that won't be the case next month. No one is expecting much of a bump out of next year's rollout, but that's also every reason to be a contrarian, and expect that to be exactly what will happen.
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