iPhone 7 Launch Put A Focus On Cameras And Apps

Apple Inc. AAPL has finally launched the iPhone 7. The features of the device were as expected, with the key selling points being the new camera features and longer battery life, Morgan Stanley Katy L. Huberty said in a report. She maintained an Overweight rating on Apple, with a price target of $123.

There were no meaningful surprises in the iPhone 7 features. Watch Series 2 is likely to have better adoption, while the higher iPhone 7 Plus pricing and unexpected acceleration in Services growth “should protect or even improve margins,” analyst Huberty mentioned.

Key Selling Features

The main attraction of the iPhone7 and 7 Plus was the new cameras. The back camera now has an upgraded aperture, flash and image signal processor, while the front camera has improved resolution and wide color capture. “The iPhone 7 Plus has an additional camera on the back, which increases zoom and adds a depth-of-field effect,” Huberty noted.

The two models have longer battery life of two hours and one hour over the 6s and 6s Plus. “Battery life is the biggest complaint from respondents in our global smartphone survey this past June, and any improvement could drive more users to refresh their iPhones,” the analyst commented.

Services Growth

Apple announced 17 million paid subscribers for Music, up from 15 million in June. Subscriber net adds continued to be about 1 million per month. Management reported 106 percent y/y growth in app downloads in the past two months, possibly boosted by Pokemon GO. This represents solid acceleration from the 37 percent App Store revenue growth reported in the June quarter, Huberty mentioned.

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