Apple Unveils All-New iPhone X To Fend Off Growing Competition

CUPERTINO, Calif. -- Apple Inc. on Tuesday unveiled a new smartwatch capable of connecting to cellular networks for calls, messages and streaming music, marking the first step toward liberating the Apple Watch and users from dependency on the iPhone.

The Apple Watch Series 3 will have an LTE chip that enables it to connect to the fastest cellular networks for many of the same functions the iPhone offers. Its Series 3 predecessor, the Apple Watch Series 2, acted more like a remote control for the iPhone, using Bluetooth and Wi-Fi to fetch email, messages and other data from the handset.

CUPERTINO, Calif. -- A decade after revolutionizing the smartphone, Apple Inc. is aiming to rejuvenate its signature product with a trio of new handsets, including a new flagship iPhone that comes loaded with a larger display and facial-recognition technology.

The new smartphone, unveiled Tuesday and dubbed the iPhone X, is one of its most anticipated in years. Investors, betting the iPhone X can revive flagging iPhone sales in China and trigger upgrades across the U.S. and Europe, have pushed Apple's share price to record highs in recent months.

"It is the biggest leap forward since the first iPhone," said Chief Executive Tim Cook, who unveiled the iPhone X at the company's annual product showcase.

Apple also revealed two other handsets, the iPhone 8 and iPhone 8 Plus, upgrades to last year's iPhone 7 and 7 Plus. The company also announced a new Apple Watch with cellular connectivity and an Apple TV with ultra-high definition functionality.

Apple is threading a needle with the three new phones, trying to generate excitement with the iPhone X, which it said will cost $999, while still getting people to buy the upgrade phones, which will start at $699 for the iPhone 8 and $799 for the iPhone 8 Plus.

While the upgraded phones will be available Sept. 22, the iPhone X won't start shipping until Nov. 3 -- much later in the year than new iPhones typically start shipping.

The announcements came at Apple's annual product showcase, held for the first time at Steve Jobs Theater on a new $5 billion campus.

The iPhone X is the first new iPhone design since 2014 and hits the market at a time when Apple's smartphone growth has slowed as consumers hold onto devices longer and competition from low-priced rivals increases. Apple's share of the global smartphone market slipped to 14.5% last year from 19.4% in 2012, according to Strategy Analytics, a market research firm.

The iPhone X -- which also boasts 3D sensors and a dual-lens camera system -- arrives amid questions about Apple's ability to innovate. Android rivals such as Samsung Electronics Co. have leapfrogged Apple on smartphone design in recent years, introducing larger, OLED handsets and water resistance. Meanwhile, low-priced smartphones in China are closing the gap offering similar features at far lower prices. Meanwhile, new products like the Apple Watch have failed to replicate the sales momentum of the iPhone and iPad.

"Apple had a good three- to four-year head start but now the [smartphone] industry is in parity with Apple," said Wayne Lam, smartphone analyst with the research firm IHS Markit. "The question has become: How does Apple redefine themselves and the next decade?"

Mr. Lam said Apple is betting the new features on the iPhone X can keep its "cash cow" product competitive. The iPhone X ditches the device's popular home button and Touch ID, the fingerprint sensor used to unlock the phone.

To unlock the iPhone X, users raise it, look at it and allow the facial-recognition system called Face ID to verify their face. The Face ID system uses sensors on the front of the device that send 30,000 dots of light across the face. Those dots are used to create a mathematical model of the user's face, which are checked against a model of the face kept on the device.

Apple marketing chief Phil Schiller said Face ID learns a user's face, even if the user changes hair style, wears glasses or puts on a hat. He said it adapts over time and works in light and darkness.

Mr. Schiller said Apple engineers worked on the technology to make sure photographs or even masks replicating a user's face couldn't trick it. He said the chances that someone other than the user could unlock the phone with Face ID are one in a million, compared with one in 50,000 for Touch ID.

The iPhone X's new design -- a 5.8-inch, edge-to-edge display -- has raised hopes that it can reverse Apple's fortunes in China, where sales have fallen six straight quarters. Chinese consumers are more influenced by a phone's appearance than consumers in other markets, and Apple hasn't kept the same appearance for three years. Analysts are hoping the new appearance helps rejuvenate sales in the market.

"The high-end Chinese phone market is super competitive and customers are very discerning but also enthusiastic," said Benedict Evans, a partner at Andreessen Horowitz, a venture capital firm. "If Apple can get something that rings the bell [with them], then this will work."

The iPhone 8 and 8 Plus feature what Apple billed as a new design, made of glass on front and back, as well as louder speakers, faster processors and upgraded cameras.

All three handsets offer wireless charging and feature new gyroscopes and accelerometers to improve augmented reality experiences on the devices.

The Apple Watch Series 3 will have an LTE chip that enables it to connect to the fastest cellular networks for many of the same functions the iPhone offers. Its predecessor, the Apple Watch Series 2, acted more like a remote control for the iPhone, using Bluetooth and Wi-Fi to fetch email, messages and other data from the handset.

The Apple Watch will feature new chips and new antenna. Chief Operating Officer Jeff Williams said it is the same size as its predecessor.

The new Watch costs $399 with cellular capability, or $329 without. It looks similar to its predecessor, except for a red accent on a knob on the right side of the device. The Apple Watch Series 2 will be reduced in price to $249.

The Apple Watch Series 3 has the potential to extend recent sales gains by boosting the device's functionality, analysts said. The cellular capabilities allow people to leave their iPhones behind and still send and receive emails and messages by using Siri's transcription abilities. Users with AirPods wireless headphones could also make and receive calls using just the watch.

Apple has sold an estimated 30 million Apple Watches since introducing the device in 2015, according to market research by IDC. The addition of Global Positioning System (GPS) and waterproof capabilities introduced with last year's Apple Watch Series 2 has the company on track to boost sales nearly 25% this year.

The update to Apple's streaming-media player, called Apple TV 4K, is the first since 2015 and comes as the device has lost market share to lower-priced rivals. Apple Vice President Eddy Cue said Apple will sell ultra-high definition films from Hollywood studios at $19.99, the same price it currently offers high-definition films. There also will be live sports in 4K from ESPN and others.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

September 12, 2017 15:44 ET (19:44 GMT)