Today: Apple (AAPL) introduced the iPhone 5 and other new offerings Wednesday, and investors and analysts had immediate thoughts. Also: Facebook and Zynga shoot higher after Mark Zuckerberg's first post-IPO public appearance, as stocks hold steady ahead of Fed announcement.
Reaction mostly warm to Apple's iPhone announcement
The iPhone is one of the most important consumer-tech innovations in history, ushering in an era of mobile devices that have made Apple the most valuable U.S. company of all time. On Wednesday, the Cupertino company unveiled the fifth generation of the device, which will be the largest yet lightest iteration of the device so far.
The iPhone 5 offers several incremental improvements that were lightly applauded by analysts, who still believe Apple will sell millions of devices and continue to rake in profits at previously unseen levels. Investors had a hard time making up their minds in general about the event, as Apple's stock price bounced up and down throughout Wednesday's session before a late rally gave it a 1.4 percent boost for the day.
HARDWARE: The new iPhone will be taller than previous iterations, with a size of 4 inches instead of the previous 3.5 inches, allowing Apple to add a fifth row of icons to the home screen. It will be the thinnest and lightest iPhone yet despite the size change, 20 percent lighter than the iPhone 4S. It will connect with 4G, or LTE, cellular networks as well as HSPA+ and dual-band Wi-Fi-n. The phone has an A6 chip that will double the speed of the CPU and graphics, as well as an updated camera and improved battery life. The iPhone 5 will cost $199 to $399, with pre-orders starting Friday and a U.S. debut of Sept. 21. Previous iterations will have their prices cut, with the iPhone 4 8GB offered for free with a two-year contract through carriers AT&T, Verizon and Sprint, while the iPhone 4S 8GB will be $100 with two-year contract.
Analysts: While many praised the technical advances in the phone's hardware, some analysts noted that none of the changes were really game-changers. Al Hilwa of IDC said "the actual level of engineering and design that has gone into it is quite amazing." Chris Jones of Canalys called it "a beautifully crafted device" in an interview with Bloomberg News, adding, "They enhanced everything about the iPhone." Destination Wealth Management CEO Michael Yoshikami was not as impressed, telling Reuters, "There is not a wow factor because everything you saw today is evolutionary."
Investors: While Asian markets closed before the event began, keeping investors from pushing mobile manufacturer competitors such as Samsung higher or lower depending on their thoughts on iPhone, Google (GOOG) and Research in Motion both fell slightly. Google, which owns Motorola Mobility and the Android mobile operating system that has a bigger share of the market than Apple's iOS, dropped 0.2 parent. RIM, which makes the rapidly descending BlackBerry brand, dropped 0.5 percent.
SOFTWARE: Apple offered changes to iOS, announcing that the sixth generation of the operating system would be available Sept. 19, but many of the new offerings were previously announced at the company's World Wide Developers Conference in June. The iPhone 5 will include Apple's new mapping app, which becomes the native application as a replacement for Google Maps. Siri, the voice-activation system Apple introduced for the iPhone 4S, will now be able to help users post to Facebook, access sports scores and delve deeper into apps to perform functions such as booking restaurant reservations and buying movie tickets. More options will be added to the native email offering, and Passbook will offer a central storehouse for tickets, gift cards and other stuff.
Analysts: Very few analysts had anything to say about the iOS 6 announcements, since they've known about them for months. "There was nothing unexpected in terms of the new features of the iPhone," Raymond James analyst Tavis McCourt told AP.
Investors: Facebook received a huge bump after Apple announced deeper integration with the social network (more on that later). Yelp, which got a boost in June from Apple integration, suffered a 1.5 percent loss after Apple chose to highlight OpenTable in Wednesday's demonstration. San Francisco-based OpenTable briefly bounced, but fell back down to a 2.1 percent loss on the day. Redwood City-based Electronic Arts (ERTS) gained 1.3 percent after one of its games was demonstrated on the iPhone 5.
OTHER: Apple also announced new iPods, an update to iTunes, a new connector for iPhones and iPods, and new headphones. The new connector, dubbed "Lightning," will be smaller and more durable, Apple said, with converters to bridge old chargers to new devices costing $29. The revamped iTunes, Apple's music program that offers downloads for purchase, will be optimized for mobile devices, as 60 percent of downloads are now purchased from iOS devices. The iPod Nano will receive a touchscreen much larger than previous versions, making it similar to a smaller iPod Touch. It will also feature an FM tuner that can be paused and resumed, Bluetooth capability and longer battery life. The fifth-generation iPod Touch will increase in size and receive an upgraded camera and processor, as well as Siri. The new headphones, dubbed "EarPods," are designed to fit more comfortably but stay in the ear with more certainty, and will be sold separately as well as be included with certain Apple devices.
Analysts: Continuing to add to the Apple ecosystem will overshadow extra money spent on new chargers or converters, analysts said. "What they deliver as far as overall richness of experience not only creates stickiness to the ecosystem and drives added revenues from content but also leaves the rest of the vendors competing on hardware cutting corners to keep margins," Gartner analyst Carolina Milanesi told The Wall Street Journal.
Investors: A sigh of relief could be heard coming out of Oakland, as Apple did not announce a streaming-radio version of iTunes to combat Pandora, which fell on rumors of such a service last week. The East Bay company rebounded to near $10 a share. Skullcandy, a recently public company that makes headphones usually sold for low prices, including earbuds, took a dive after the headphones announcement and ended the day down 4.5 percent. Koss, a similar but more established company, fell 1.2 percent. The first iPod refresh in two years didn't damage competitors such as Sony and SanDisk, which gained 0.9 percent and 1 percent respectively. Amazon, one of the biggest iTunes rivals for music downloads, stayed even.
Facebook, Zynga stocks take needed large leaps
Facebook experienced a needed Wall Street rebound Wednesday, with investors jazzed by CEO Mark Zuckerberg's speech Tuesday and Apple's announced Facebook integration sending the stock zooming higher and taking Zynga along for the ride.
The Menlo Park social network, which has suffered since a record-breaking initial public offering in May, gained 7.7 percent to close near $21, its highest closing price in almost a month.
In a speech at a San Francisco conference on Tuesday, Zuckerberg admitted that Facebook's stock movement so far had been "disappointing," but ensured investors that the company would monetize its popular mobile service, eventually making more money from that arena than through its website.
Facebook's gaming partner, San Francisco-based Zynga, also experienced a much-needed boost, jumping 10 percent to $3.07.
Stocks stable as Wall Street awaits news on Fed move
Overall, Wall Street had a steady day while the Federal Reserve began a two-day meeting expected to end in economic action from the U.S. central bank. All three major U.S. stock indexes gained, but none moved more than 0.3 percent.
The Fed will finish meeting Thursday and its leader, Ben Bernanke, will have a news conference at which he is expected to announce another round of bond-buying or other initiatives seeking to jolt the U.S. economy.
"Everyone is expecting the Fed to put the pedal to the metal. Anything short of that and we could have some serious disappointment if the Fed doesn't come through. No news will be bad news," Jack Ablin, chief investment officer at Harris Private Bank in Chicago, told AP.
Silicon Valley tech stocks
The tech-heavy Nasdaq composite index: Up 9.78, or 0.32 percent, to 3,114.31
The blue chip Dow Jones industrial average: Up 9.99, or 0.07 percent, to 13,333.35
And the widely watched Standard & Poor's 500 index: Up 3, or 0.21 percent, to 1,436.56
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.