With slipping iPhone sales, stakes are high for Apple CEO Tim Cook

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It's a September tradition as predictable as heading back to school. But when Apple Inc. chief executive officer Tim Cook takes to the stage Wednesday, where he is expected to unveil the latest iPhone, the stakes will be as high as they've been in years.

Apple is coming off two consecutive quarters of falling revenue, breaking a remarkable growth streak that began 13 years earlier. Slipping iPhone sales have borne the brunt of the blame for this development. As IDC noted in July, Apple's 40 million units shipped in the second quarter were the lowest in almost two years.

The Cupertino, Calif.-based company's stock has stalled, too. Shares are trading for about 2 per cent less than they were one year ago, on the eve of the introduction of the iPhone 6s and 6s Plus.

Apple suffered another blow just last week when the European Commission ordered Ireland to demand a €13-billion ($19-billion) tax payment from the company. Still, there is optimism that the clouds may be lifting.

"We believe [this] news is one of the last pillars in the 'gloom and doom' cycle that has engulfed the Apple story since the end of 2015 and into this summer," Drexel Hamilton analyst Brian White wrote last week in a note recommending a "buy" on the stock.

At the centre of any positive outlook is the prospect of a new and improved iPhone. Whatever is coming on Sept. 7 (rumours suggest the device will be dubbed iPhone 7, following Apple's tried and true roll-out tradition), most analysts agree that a significant step forward is necessary to induce a new upgrade cycle after two years of selling the same basic device.

The pent-up demand could be enormous. Traditionally bullish Apple analyst Gene Munster of Piper Jaffray estimates there are 275 million iPhone users with devices more than two years old. That's a lot of potential customers looking for a newer, thinner, faster iPhone.

What might iPhone 7 look like?

The Android race

In the past, Apple has taken two basic approaches to functional upgrades to the iPhone: Borrow from Android or invent something new. The pace of innovation and competition on price is furious within the Android market – which currently makes up about 85 per cent of total smartphone sales – and Apple has often sat back and watched Android test some unusual ideas before cloning them.

Take screen size, for example: Apple's larger iPhone 6 and 6 Plus models (4.7 and 5.5 inches diagonally, respectively) came after years of mocking oversized "phablet" Android phones. Those giant iPhones came at the same time as Apple moved aggressively into China.

Some of Apple's more original "surprises" were ideas that were new to the overall market, what might be called software features that also required hardware upgrades: Siri, TouchID and Force Touch.

AI and VR

Android has been moving much faster than Apple to transform its voice-controlled personal assistant into a fully functioning learning machine leveraging Google's data and integrating more phone features and third-party apps. The new version of Siri in Apple's iOS 10 is said to move in this same direction.

Android is also pushing hard on integrating virtual reality into its phones, and has many more partners working on wearable and smart home technology than Apple can boast. Maybe Apple will reveal more moves in that direction, too.

The beats go on

Apple's main surprise this year could be something that no Android manufacturer is even rumoured to be contemplating: The end of the venerable 3.5-millimetre headphone jack. The replacement could be either wireless Bluetooth-connected headphones or a wired option that shares the Apple Lightning connector port.

Some say the move is the inevitable termination of the jack itself, a 19th-century analog technology. Others are less enthusiastic. The Verge's Nilay Patel warned of the coming logjam when the phone has only one port. "When you want to use your expensive headphones and charge your phone at the same time, you are going to love everything about that situation."