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Apple tempts fate with next iPhone

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By Tripp Mickle ,WSJ

For the iPhone’s 10th birthday, Apple Inc. is giving itself a big, new challenge.

Maintaining its usual secrecy about product plans, Apple is widely expected later this year to announce three iPhones instead of the usual two – updated versions of the current iPhone 7 and 7 Plus as well as a 10th-anniversary iPhone with a different display and new features like wireless charging and facial-recognition technology.

Such devices would make an attractive purchase for customers disappointed with the relatively incremental improvements of recent smartphones. But analysts say that such a plan also has big risks for Apple, including the possibility of a higher price tag that could dampen demand, trickier manufacturing requirements and the added complexity of forecasting and marketing a third model.

Apple Inc. co-founder Steve Jobs engineered Apple’s revival in the early 2000s in part by slashing the number of Apple products sold, adopting the philosophy that making fewer but better devices would increase sales. The iPhone’s popularity has tested that philosophy. Though Apple produces fewer handset models than many of its rivals, it has increased the number of colors from one to six in the past decade and expanded from a single model annually to five models last year, including the iPhone 6, iPhone 6 Plus and iPhone SE. Apple also makes the iPad in four models, the Apple Watch in two versions with countless variations, 11 Macs, the Apple TV and a host of accessories.

Most product expansions have come off without trouble under Apple Chief Executive Tim Cook, whose operational prowess helped turn Apple into the world’s most valuable listed company. The company did run into trouble, though, as its newest device, the AirPod headphones, were delayed several weeks by production challenges and remain back-ordered. It also missed out on sales of the iPhone 7 Plus, its highest-priced handset, during the December quarter because of what Mr. Cook has acknowledged were mistakes in forecasting demand and supply.

Anticipation of the new iPhone has helped push up Apple’s stock price to a record this year, although it has recently lost some of those gains.

Challenges with some upcoming iPhone hardware features have stoked concerns about potential for delays this year specifically for the 10th-anniversary handset. Several analysts say they expect it to be several weeks late because of challenges related to a new type of fingerprint-verification technology. Apple also is running into problems with a lamination process during the device’s assembly, multiple analysts have reported.

“If they lose just one week, that’s big numbers in terms of volume and a lot of revenue and a lot of angst,” Dan Panzica, a supply-chain analyst at IHS Markit who follows Apple closely.

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