Punctuated evolution

Apple event more likely evolution than meteor

Apple's investors and fans are clamouring for a world-changing new gadget at the tech giant's media event on Tuesday - a watch, a TV or something hitherto kept secret. History and rumours suggest they will have to be content with small improvements on existing devices. Financially, a deal to sell iPhones through China Mobile could matter more.

In a cycle kicked off by former chief executive Steve Jobs, Apple typically reveals new products twice a year. Upgrades to existing hardware tend to occur annually. Completely new products like the iPod, iPhone and iPad are infrequent - those three arrived in 2001, 2007 and 2010, respectively.

Apple watchers shouldn't, therefore, be surprised if it's another year or more before the company unveils something truly novel. Meanwhile, despite Apple's secrecy, some information leaks because it's hard to keep the needed huge component orders under wraps. The whispers suggest the company will unveil two new versions of its smartphone - an update to the iPhone 5, and a cheaper version to appeal to emerging markets.

Even if Apple's top-end handset continues to look the same, the improvements are likely to be significant - if perhaps smaller than the leaps possible in earlier generations of smartphones. Fingerprint recognition would lure security-conscious and password-averse users and corporations. And, better battery life, faster processors and more memory are always desirable.

Apple's problem, though, is that Samsung in particular now matches its rival's pace of innovation and on occasion outdoes Cupertino. Apple's decreasing ability to name its price explains why its gross margin has fallen by six percentage points over the past year. The 37 per cent recorded in the quarter to June was still impressive, but the decline explains why investors hope Apple will come up with a new gadget soon.

Yet, even if a new watch or TV sells like hot cakes, it's hard to see it making a big difference to the company's $450 billion valuation overnight. Though the iPhone was released in 2007, Apple's sales of iPods outweighed smartphones until 2009 - and the iPhone more or less created an entire global market.

Happily, Apple may unveil one more thing at a second event in Beijing next week: a deal to sell phones - perhaps mainly the new cheaper iPhone - through China Mobile to more than 700 million subscribers. Though that may put further pressure on margins, it could also boost the top line enough to buy Apple more time to put the final touches on whatever device is coming next.