Apple (AAPL) September event preview: Expect iPhone 15 and Watch Series 9 announcements

Apple will host a Special Event on September 12, 2023, when it is widely expected to announce its new line up for the iPhone 15 and Apple Watch Series 9. We discuss industry expectations for the launch event and new products.

We believe that the ongoing investments in the iPhone 15, as well as the Apple ecosystem (e.g., iOS, Services, iPad/Mac/Watch compatibility) should drive further growth in the iPhone installed base through market share gains and minimizing churn. The iPhone 15 should drive price/mix increases in iPhone revenue reflecting like-for-like price increases on Pro/Pro Max (Ultra) as well as mix shift toward higher priced models. We forecast iPhone revenue growth of 5% yoy in F2024. Although we recognize the risk of potential supply chain constraints (e.g., displays, image sensors) resulting in fulfillment challenges or macroeconomic challenges resulting in delayed upgrades, the durability of the iPhone installed base due to minimal churn helps to ensure demand should eventually be fulfilled dampening the impact to earnings power.

We expect AAPL to announce the upcoming launch of 4 new iPhone 15 models: (1) iPhone 15 (6.1” device); (2) iPhone 15 Plus (6.7” device); (3) iPhone 15 Pro (6.1”); and (4) iPhone 15 Pro Max (potentially renamed Ultra; 6.7”). Press reports suggest that pricing will be unchanged for the base and Plus models, starting at $799 and $899 respectively, while pricing for the Pro and Pro Max models may increase by $100, starting at $1,099 and $1,199, respectively

Notably, some press reports are suggesting that the iPhone 15 Pro Max could see an even larger price increase and start at $1,200 (+$200). In our view, AAPL’s investments in iPhone hardware and across the Apple ecosystem (e.g., software, services) in recent years have provided consumers with additional value and should help warrant the price increases. The iPhone Pro has not seen a price increase since it was first introduced with the iPhone 11 Pro in September 2019.

Key features exclusive to last year’s iPhone 14 Pro and Pro Max will now be standard for the iPhone 15 and 15 Plus including the A16 chip and the Dynamic Island. All iPhone 15 models are expected to use the USB-C charging port (Lightning port prior). Demand for the iPhone 15 Pro and Pro Max should benefit from several new features that should help drive premiumization and price/mix shift toward higher-end models including: the A17 chip (first chip uses the 3nm process, making the phone faster and more power-efficient), design improvements (e.g., titanium frame, thinner and curved bezels), improved battery life, new colors, upgraded USB-C port, more RAM, and a new periscope lens for the Pro Max only. The iPhone 15 Pro/Pro Max may also be offered with 256GB of starting storage, rather than 128GB – helping to warrant the price increases.

Historically, Apple has announced new iPhones on a Tuesday or Wednesday with availability about 10 days later on the following Friday. For instance, the iPhone 14 was announced on Wednesday, September 7, 2022 (preorders available same day) with availability on Friday, September 16, 2022. If the iPhone 15 is announced on Tuesday, September 12, 2023 as widely expected, preorders should open up that day with product availability on Friday, September 22, 2023.

Notably, there have been press reports citing potential delays of the iPhone Pro Max due to image sensor supply issues (see 9to5 Mac: iPhone 15 Pro Max to face 3-4 week delay, August 21, 2023) and other press reports citing potential delays due to screens in the iPhone 15 Pro and Pro Max.

In prior years, Apple has shipped certain models a few weeks later than the base model, presumably because of production constraints. For instance, last year, the iPhone 14 Plus was made available 3 weeks after the other models (10/7/2022 v. 9/16/2022) with press reports citing supply chain issues on the screen driving the delays. Similarly, the iPhone XR shipped after the XS (10/26/2018 v. 9/21/2018) and the iPhone 12 mini and Pro Max shipped after the 12 and 12 Pro (11/13/2020 v. 10/23/2020).

The Apple Watch Series 9 will reportedly include a new S9 processor that provides improved performance and battery life. Aside from the new processor and new colors for the Watch and band, other improvements will likely be more iterative. As a reminder, key highlights from the Series 8 included temperature sensing for health monitoring, Crash Detection, and new fitness features. Historically, Apple Watch has seen more modest price increases with the Apple Watch Series 4, 5, 7, and 8 all starting at $399 for the GPS-only 40/41 mm size. We expect the same price ranges for the Apple Watch Series 9. The Apple Watch Ultra 2 is expected to see iterative updates and Apple likely will also launch a new AirPods Pro with USB-C.