Apple shows off new gadgets, but Pay is bigger bet

Staff Writer
Columbus CEO

CUPERTINO, Calif. (AP) — Apple showed off thinner iPads and a new iMac with a high-resolution display on Thursday. Sleek and stunning, yes, but not likely to spark the next iRevolution. The tech giant's bigger strategic bet is that mobile pay service Apple Pay, debuting Monday, will be the next thing you didn't know you needed — but now can't live without.

The new iPads should sell well during the upcoming holiday shopping season, even as the worldwide tablet market is showing signs of slowing growth, analysts said. But they're not the kind of game-changing new product that has made Apple a darling of Silicon Valley and the tech industry's most valuable company.

Instead, the industry will be watching closely to see how consumers react to Apple Pay, which CEO Tim Cook said will go live next week. Forrester Research analyst Frank Gillett says the service is "hugely important" because it puts Apple in the middle of a wide range of consumer transactions. That underscores Apple's value as a brand and gives people a powerful new reason to buy iPhones, iPads and other gadgets.

"It's a strategic advance not just because it may be a new revenue source, but because it injects Apple into a whole different value stream" for customers and the company's business partners, Gillett says.

That's regardless of whether Apple Pay generates direct revenue: Apple has said it won't charge consumers or merchants for using it, but some experts think banks will share a small slice of the fee they normally collect on each credit card transaction.

Mobile pay isn't new; rival tech companies and the banking industry have worked on such systems for years. But Apple is launching its new service at an ideal time, says Gartner tech analyst Van Baker. Consumers are increasingly worried about the security of traditional credit and debit cards and U.S. merchants are facing new mandates to switch to safer chip-based cards or other payment systems.

"Consumers are going to have to learn a new way to pay," Baker said. "That levels the playing field for new technology."

Assuming there are no system breakdowns or security flaws, Apple will get the benefit of pioneering a mobile payment system that has widespread brand recognition and acceptance from consumers, retailers and banks. That's crucial to its success, said MasterCard Inc. executive James Anderson, but he doesn't expect Apple will hold the market by itself. The payment processor plans to work with other digital systems as well.

"We've done a lot of work with Google over the years and I expect we'll continue to work with them," Anderson said.

As for the new iPads announced Thursday, analysts praised their technical features, including faster processors, better cameras and Touch ID, which lets users unlock the device with a fingerprint.

"I've heard people say it's evolutionary, rather than revolutionary," tech expert Carolina Milanesi of the research firm Kantar Worldpanel said after Apple's announcement. But she added, "why do you need to revolutionize something that's already the best in its class?"

The new 27-inch iMac desktop computer with a high-resolution Retina screen struck Bob O'Donnell of TECHnalysis Research as the most cutting-edge hardware product announced Thursday.

"It's stunning. It shows Apple is doing cool new stuff," he said. "Unfortunately it's not going to sell to a lot of people. Not many people are willing to pay $2,499 for a new desktop computer anymore."