By Stephen Nellis and Kenrick Cai
CUPERTINO, California, Sept 9 (Reuters) - Apple kicked off its annual product launch event on Wednesday at its Cupertino, California, headquarters, where it is widely expected to unveil a pricey folding iPhone, with the introduction of iPhone 18 Pro handsets.
The event, the first with new CEO John Ternus at the helm, will be the most noticeable overhaul of Apple's flagship product since it removed the physical home button from the iPhone X in 2017. The iPhone brought
in $209.6 billion, or just over half of Apple's sales, in its most recent fiscal year.
Former CEO Tim Cook handed over the leadership baton to Ternus with a video about how to start the presentation that ended with a closeup of Cook, who said, "Not me. That's your guy," pointing back toward Ternus.
Ternus touted the iPhone as a personal AI hub that focused on privacy, saying that others wanted to collect and store personal data. "Honestly, trust only goes so far when your data is no longer yours to control," he said. "That's why Apple Intelligence runs on device whenever it can."
Apple's Lilian Rincon, who oversees AI products for the iPhone maker and was recruited from Google earlier this year, described an updated Siri assistant that will work with 300,000 apps at release.
Executives showed off the iPhone 18 Pro and the 18 Pro Max handsets that are the latest versions of Apple's well-known line. Pricing for the iPhone 18 Pro starts at $1,199.
Apple said its new A20 Pro chip, built on a 2-nanometer process, brings improvements to help advanced AI models to run directly on iPhones. Apple also said the A20 improved a vapor-based cooling system using advanced packaging techniques used in its Mac chips to help the phone gain performance without using a cooling fan. The chip will be used in the iPhone 18 Pro.
"Apple Intelligence and Siri are front and center. Apple is using its biggest strength, the sheer scale of its hardware base, to make AI an integral part of the everyday experience across devices," PP Foresight analyst Paolo Pescatore said. Shares were down about 1% during the Apple presentation.
PREMIUM PRICING CHALLENGE
Ternus previously served as Apple's hardware chief but has kept a low public profile aside from a handful of product introductions and sustainability initiatives. It will fall to Ternus to persuade Apple's customers that they need a foldable device that analysts believe could cost more than $2,000, a new high for a global brand that has defined mass luxury.
While Samsung Electronics and Huawei Technologies have sold folding phones since 2019, the devices have remained a niche among tech enthusiasts. But even with a steep price tag, analyst firms such as International Data Corporation expect Apple will sell every foldable iPhone it can produce and secure a 40% share of the lucrative niche by the end of next year.
Analysts also expect Apple to benefit from its late entry into the folding phone category by mastering key engineering challenges such as creating an elegant-but-sturdy hinge that can survive repeated opening and minimize how much of a crease shows where the screen folds.
One remaining challenge could be how well the devices resist dust and water, an area in which Google's most recent Pixel 10 Pro Fold bested Samsung's offerings with what is known as an IP68 rating, meaning the device is dust-tight and can be dunked 1 meter (3.3 feet) deep in water.
Wednesday's event is also expected to mark a major change in Apple's annual product schedule.
While analysts expect Apple to show off new watches, they anticipate the company will hold off on updates to its more affordable iPhone models until next spring and instead focus only on the new folding device and its iPhone Pro and Pro Max lineup.
The move is aimed at smoothing out Apple's annual sales cycle, which typically shows a large bump in revenue during the year-end holiday quarter for the U.S. and Europe.
(Reporting by Stephen Nellis and Kenrick Cai in Cupertino, California; Writing by Peter Henderson; Editing by Sayantani Ghosh and Matthew Lewis)
