Apple is buying time to the Next Big Thing

SAN FRANCISCO — Apple's icon-making design machine stayed in slumber mode Wednesday. That may be ok — if you buy the idea this is the lull before the Next Big Thing.

The tech juggernaut played it safe at its biannual launch event, rolling out serviceable upgrades to iPhone and Apple Watch. These are sure to satiate its fans and keep it competitive with rival Samsung. And they may be enough give it time to build a technological bridge to the next era, where virtual reality, artificial intelligence, and maybe an intelligent car put Apple back on the cutting edge, wowing consumers with devices they barely dreamed of.

That's a few years away, a veritable lifetime in the blur-fast pace of Silicon Valley. But for a company known for its boldways under the late Steve Jobs, it seems the wise course for one now valued at $580 billion.

Critics have bemoaned a wow factor missing from recent Apple events and — in a nod to them — it delivered several mini-wows: a faster, water-resistant iPhone 7; wireless ear buds called AirPods; a better iPhone camera; and bringing Pokémon Go to Apple Watch Series 2. It announced partnerships with Nintendo, Niantic and Instagram.

Apple is a technology giant in transition. Sales of its cash cow, iPhone, have declined two straight quarters in a cooling smartphone market, while it cultivates its thriving services division, which includes Apple Music subscriptions, App Store purchases and iCloud storage.

Buried amid the gadget news in the two-hour presentation were updates in that division.

Apple Music, started just over a year ago, is up to 17 million paid subscribers. More than 140 billion apps have been downloaded from the App Store, whose "phenomenal" growth is up 106% in July and August from a year ago, Apple CEO Tim Cook said.

"By itself (services) could top a Fortune 200 company," says Tim Bajarin, principal analyst at market researcher Creative Strategies.

Under Cook, Apple is an entirely different beast than the one under Steve Jobs: it's much larger, less prone to risk and has more at stake. Sitting on more than $200 billion in cash, it is betting on the near-future by snapping up start-ups in the AI and machine-learning fields. Artificial intelligence, for example, is being used to identify people in photos, Apple said on Wednesday.

Today's generally well-received smartphone features is to likely to attract users who haven't upgraded since the iPhone 5, predicts Gene Munster, an analyst with Piper Jaffray. That's the type of revenue bump to carry Apple over to its next wave of bold moves.

Angelo Zino, of S&P Global Market Intelligence predicts another spike in sales when the next iPhone, the 10th-anniversary edition of the behemoth smartphone franchise, debuts as expected next year.

Follow USA TODAY San Francisco Bureau Chief @jswartz on Twitter.


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