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This article was first published 9 years ago  » Business » Paying bills becomes iPhones' biggest attraction

Paying bills becomes iPhones' biggest attraction

By Soham Chatterjee
September 10, 2014 19:25 IST
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The addition of a mobile payments service to Apple Inc's next iPhone could help to boost sales of the larger-screen phones and claw back market share lost to mobiles running on Google Inc's Android platform.

At least six brokerages raised their price target on Apple's stock by as much as $16 to a high of $116 on Wednesday, a day after the launch of the iPhone 6 and the Apple Watch - the first new product introduced by Chief Executive Tim Cook.

Piper Jaffray analyst Gene Munster said the "star of the show" was Apple Pay - the company's new wireless payment system.

It will allow iPhone 6 and 6 Plus users to pay for a burger at McDonald's Corp or groceries at Whole Foods Market Inc at the tap of a button, using their American Express Co, Visa Inc or Mastercard Inc bank cards.

Samsung Electronics Co Ltd, Motorola Mobility and others include similar wireless technology in many Android smartphones. But with payment systems such as Google's Wallet failing to catch on, the technology is not standard in handsets.

"On the mobile payments front, we believe the company made a major breakthrough and cracked an important and vexing issue that has plagued the industry for several years regarding customer ownership," William Blair analysts wrote in a note.

Cook, who took over as CEO from Steve Jobs in 2011, has been under pressure to launch new services and come up with larger-screen phones to counter Samsung's popular Galaxy Note phablets.

Worldwide market share of iPhones, which contribute more than half of Apple's revenue, slipped to 11.7 percent for the quarter ended June from 13 percent a year earlier, according to research firm IDC.

"Apple Pay is a feature that should help sell Apple products and provide some small help to the bottom line," BMO Capital Markets analysts said.

Apple Watch, the company's first new product since the iPad, is tethered to the iPhone 6 models. Starting at $349, it will receive phone calls and messages, play music and serve as a digital wallet to pay for goods.

The watch, which will go on sale in the United States next year, has received mixed reactions. Fashion commentators like its clean aesthetic, while some tech writers pointed out Apple's silence over battery life.

Sony Corp, Samsung, LG Electronics Inc and Qualcomm Inc have launched smartwatches based on Google's Android Wear, without great success.

Apple shares were trading down 0.6 percent at $97.45 in premarket trading. They closed down 0.38 percent at $97.99 on the Nasdaq on Tuesday. 

(Additional reporting by Lehar Maan in Bangalore)

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Soham Chatterjee
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