MONEY Apple

Here’s What Happened When We Tried Apple Pay

Sure, the new payment system looks all shiny in Apple's demos, but does it really work on the streets of New York? We set off to find out.

Updated at 9:30 pm

We gave Apple Pay a real-world test run on Monday, the day the new payment system launched. And as you can see in the video, it worked pretty well. At least where we already expected it to work.

There are a few wrinkles you don’t see on camera. Setting it up wasn’t quite seamless. I deliberately tried to set it up on my new iPhone without reading in advance about how to do it—after all, that’s how most people use their iPhones in real life. I found myself roadblocked pretty quickly. The Passbook app where credit card info is supposed to be stored… didn’t seem to have any way to enter my credit card info. It turned out I had to update my phone to the latest version of iOS 8. I got the phone just last week, and have already upgraded once, so that was a bit of surprise.

Day two (Tuesday) of trying to use Apple Pay in everyday life, with no camera crew around, was less successful. At Starbucks, I watched other customers paying with smartphone apps, but learned that they were using the coffee company’s own system. Starbucks doesn’t do Apple Pay. At a Duane Reade drugstore—a New York brand of Walgreens—the reader didn’t work. But the cashier told me most of the other readers in the store did. Later on, I successfully paid for a couple of Lightning cables at a Walgreens in Brooklyn. “Wait, that thing actually works?” said the woman behind the register.

Apple Pay doesn’t feel revolutionary. You take out your phone instead of your credit card to pay for things—it just means reaching into a different pocket. But that probably counts as a success for Apple in the long run. Using Apple Pay is similar enough to what I already do that I can see it easily creeping into my everyday routine.

MONEY Tech

Here’s Why Apple Had Such a Great Quarter

Local resident Andreas Gibson celebrates after being the first to exit the Fifth Avenue store after purchasing an iPhone 6 on the first day of sales in Manhattan, New York September 19, 2014.
Adrees Latif—Reuters

And why you can expect even more good news next quarter.

Summer is usually a slow time for Apple APPLE INC. AAPL 2.7165% , much as it is for other consumer-electronics companies. For the iPhone maker specifically, summer is right before its widely publicized iPhone launches, which should intuitively create purchase delays as consumers wait for the latest and greatest. Not this time.

Apple just crushed expectations.

Starting with the headliners

Most of the pertinent metrics tapped new records for the quarter ended in September. Revenue came in at $42.1 billion, which translated into $8.5 billion in net income. That’s $1.42 per diluted share. Gross margin stayed strong at 38%, a modest sequential decline. Apple also declared a $0.47-per-share quarterly dividend.

The Street was modeling for $39.9 billion in revenue, $1.29 in EPS, and a gross margin of 37.9%. Apple’s own guidance topped out at $40 billion and 38% gross margin.

iPhone is officially a $100 billion business

Despite all of the speculation surrounding the iPhone 6, iPhone unit sales came in well above expectations at 39.3 million, a 16% jump from a year ago. Analysts were expecting just 37.5 million units. Average selling prices put up an encouraging $42 jump to $603. That helped trailing-12-month iPhone revenue cross the $100 billion threshold for the first time ever.

Source: SEC filings. Fiscal quarters shown. TTM = trailing 12 months.

Even better yet, Apple normally puts up another ASP increase during the calendar fourth quarter following the launch of new models, so the company could have an ASP tailwind this holiday quarter.

Apple is unsure of when it will reach supply and demand balance, since it currently has a significant backlog of orders. The company is selling every unit it can make, and CEO Tim Cook said supply and demand are currently so far apart that they’re “not even on the same planet.”

iPad is still lagging

Technically speaking, the iPad remains a relative soft spot in Apple’s results, with unit sales falling 13% to 12.3 million. There’s a broader deceleration occurring in the tablet market, and Apple is not immune. Still, Cook continues to consider the current situation little more than a “speed bump” on the long-term road to riches.

He also added some useful context. First, since Apple has been in the tablet business for only four years, it’s difficult to determine what the upgrade cycle will be. Everyone expects it to be longer than smartphone upgrade cycles, but it remains unclear by how much. On top of that, what’s not shown in these high-level figures is which countries Apple is selling in, or the demand characteristics in those countries.

Adoption in developed markets was very quick to take off, and those users are still trying to determine their upgrade cycles. Sales are now shifting to emerging markets, where 50% to 70% of buyers are first-time tablet buyers. That has important long-term implications, since those users are now on the Apple upgrade track.

Cook is less interested in the quarterly trends and remains extremely bullish on the bigger picture.

Macs set a new record

Apple sold 5.5 million Macs during the quarter ended in September, a new record and again outpacing the broader PC market. The back-to-school season was particularly kind to the company, according to Cook.

Management attributed this strength to its laptop lineup, which is even more impressive considering the mid-2014 upgrades were modest, as Apple is still waiting for Intel to ship its Broadwell chips in volume.

Cranking up share repurchases

Last quarter, Apple kind of slowed its rate of share repurchases, which made sense, since shares have recovered and it gets marginally less bang for its repurchase buck. This quarter, Apple cranked up the repurchase again, embarking upon its fourth accelerated share repurchase program, or ASR.

Source: SEC filings. Fiscal quarters shown.

Share repurchases this quarter totaled $17 billion, consisting of a $9 billion ASR program and $8 billion in open market repurchases. Even as Apple shares are now within spitting distance of all-time highs, it clearly still thinks the current valuation is compelling. Cook more or less agrees with Carl Icahn.

Once again, the buybacks helped juice EPS growth. Diluted EPS was up 20%, outpacing the 13% jump in net income. Apple has now repurchased nearly $68 billion to date, leaving over $22 billion of its total $90 billion repurchase authorization. That should hold it over until the next update to its capital return program, which is typically in March or April.

Some reporting changes

Starting in fiscal 2015, which just kicked off, Apple is also making changes to its reporting methods. The last reporting change occurred about two years ago, when the company unbundled accessories and peripherals from their related segments and established the iTunes/Software/Services segment.

Going forward, iTunes/Software is being renamed the Services segment, but this will also include other services such as Apple Pay. Other Products will include the current accessories business, along with the iPod, Apple TV, and forthcoming Apple Watch.

Current segments Future segments
iPhone iPhone
iPad iPad
Mac Mac
iPod Services
iTunes/Software/Services Other products
Accessories

Source: Conference call.

One analyst asked whether grouping Apple Watch into the Other Products segment says anything about Apple’s expectations for its upcoming wearable. Cook responded decisively, “It says nothing about our expectations.” Rather, the decision was based on current revenue bases, and Apple may decide to break out Apple Watch performance at a later time.

More importantly, Apple knows that its smartwatch competitors are watching its every move and are very interested to get figures and data points surrounding this nascent business — figures and data points that Apple doesn’t want to share with its rivals. Not sharing with rivals entails not sharing with public investors.

That may be somewhat frustrating, especially at first, but if Apple Watch becomes material to the business, then Apple will probably begin disclosing pertinent figures. Until then, Apple will probably tout various milestones as it hits them from time to time.

Additionally, Apple’s retail results have long been a distinct segment, which has always made its geographical disclosures incomplete. For instance, all retail stores have been included in this reportable segment, regardless of where they are located. Apple is dissolving the Retail reporting segment and will begin including those results in the stores’ respective geographies. That will make the geographical segments much more relevant and usable (finally), particularly the all-important Greater China segment.

It’s the time of the season

As Apple heads into the holiday season with a fresh product lineup, it’s expecting another all-time record quarter. Revenue is expected in the range of $63.5 billion to $66.5 billion, which represents 13% growth at the midpoint. That would be the highest growth in eight quarters, before even considering the possibility of a blowout.

So much for slow summers — or falls or winters for that matter.

TIME Companies

Apple’s Growth Stays Strong in Latest Quarter

People walk past the Apple logo at the Apple Store at Grand Central Terminal in New York.
People walk past the Apple logo at the Apple Store at Grand Central Terminal in New York City Timothy A. Clary—AFP/Getty Images

Tech-giant reports beat analyst expectations with strong sales of iPhones and Mac computers. Sales of iPads fell, however

Apple on Monday reported a 12.7% bump in fourth-quarter profit, sending shares up nearly 1% in after-hours trading to just above the $100 mark. Here are the most important points from the tech giant’s latest earnings report.

What you need to know: Apple crushed analyst predictions by posting sales of $42.1 billion in the fourth quarter, which was more than a 12% increase over the same period last year. The company reported $8.5 billion in profits, or $1.43 per share, which is an improvement of $1 billion year-over-year. Fortune’s Philip Elmer-DeWitt recently polled a few dozen analysts for their Apple quarterly predictions and every last one said to expect a record quarter for the company, including average sales and earnings bumps of at least 7.1% and 11.9%, respectively.

In July, Apple’s revenues grew by 6%, but came in just below analysts’ expectations despite a 12.6% bump in Q3 iPhone sales.

The big number: Apple said it sold 39.3 million iPhones during the fourth quarter, which beat analysts’ estimates and represents an 11.6% increase over the 35.2 million sold during the same quarter last year. The fourth quarter included September’s unveiling of Apple’s new iPhone 6 and iPhone 6 Plus and the company said in a press release announcing the fourth-quarter results that strong iPhone and Mac sales helped drive a record month of September.

Mac sales jumped 25% year-over-year, to 5.5 million, while iPad sales declined for the third quarter in a row. Apple, which just revealed its new iPad Air 2 last week at a product-launch event, said Monday that its iPad sales were down more than 7%, to 12.3 million, in the fourth quarter.

What you might have missed: Apple’s strong fourth-quarter results came after the company’s mobile-payments system, Apple Pay, went live on Monday along with an update to its mobile operating system, now known as iOS 8.1. The launch came on the heels of Apple announcing it had signed up another 500 banks to support the Apple Pay platform. Apple Pay is expected to compete with PayPal and other online systems. The entire mobile-payments market had more than 11 million users last year and could grow to have more than 36 million users in 2016, according to eMarketer.

This article originally appeared on Fortune.com

TIME women

Corporate Egg Freezing Is a Benefit, Not a Mandate

Apple IPads Sales Down
In this photo illustration an Apple iPad displays it's home screen on August 6, 2014 in London, England. Peter Macdiarmid—Getty Images

Darlena Cunha is a Florida-based contributor to The Washington Post and TIME among dozens of other publications.

No matter how nefarious you think Apple and Facebook are, the bottom line is that women are getting more choice

Can everyone ease up on Apple and Facebook already?

Last week’s news that the two tech giants now pay for female employees to freeze their eggs prompted many to say that the program could make women feel as if they have to put their child bearing off until it’s convenient for the companies, forcing women to have their lives “in the right order.” These critics say that if women ignore the egg freezing option and choose to have babies in their 20s or early 30s, they may be indirectly penalized.

I could see reason to protest if Apple and Facebook had replaced their extremely generous (by U.S. standards) maternity and paternity leaves, “baby cash” or adoption and other infertility coverage with their new policy. But they haven’t. This benefit will be provided in addition to the family-oriented programs already in place. It’s a boon for the companies, yes, but also for the women working within them.

It can be incredibly hard to juggle the demands of a job in the technical field and the demands of a toddler. More than 50% of women in tech leave their jobs midway through their career. In an unrelated survey of 716 women who left the tech field never to return, two-thirds cited motherhood as a deciding factor. And now companies are responding in kind. Knowing that infertility issues can increase as maternal age increase, the corporations have decided to fund child-planning programs that speak to a population in their buildings. They’re not telling women they can’t have families while working; they’re offering help to women who have come to the decision not to have families at a young age to begin with.

Let’s not forget that women have free will. They do what they want. Many working in the tech field have toiled for decades to perfect their resume in the competitive landscape. Many simply don’t want to have a family at a young age. By acting like offering egg freezing forces the hand of women in tech to delay families before it has been proven to do so, we are forgetting the many women who are playing that hand of their own volition. We are telling them they must want to delay childbearing only because their work is giving them those cues. We are acting like all women not only want a family, but want one in their 20s. Because biology. Or women-folk. Or something.

For parents, daycare costs, health emergencies, simple lack of sleep and feeling spread too thin are par for the hectic course. Yes, businesses don’t want to have to deal with that, but did anyone pause to think that maybe the women (and possibly men) in the field don’t want to deal with that either? I wonder again, how is giving women the choice a bad thing?

According to the Pew Research Center, in 2008 18% of women remained childless into their 40s. By the time a woman reaches her early 40s, likelihood of pregnancy naturally falls to just 5%, and infertility treatments are costly and not always covered by insurance.

It’s important to mention that Apple and other tech companies already offer help for family planning, including adoption and infertility coverage. In that light, this new policy isn’t much different in kind, and really just an extension of care already being provided.

Egg freezing isn’t the one-and-only, all-inclusive solution to tech’s lack-of-women problem, but it is an olive branch for women struggling to keep their footing in a career filled, so far, with men, whose family responsibilities, even in this day and age, are still viewed as less of a problem than women’s. We may not have won the war yet, but we shouldn’t complain about winning a battle.

Darlena Cunha is a Florida-based contributor to The Washington Post and TIME among dozens of other publications. You can find her on Twitter @parentwin or on her blog at http://parentwin.com.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

MONEY stocks

3 Things to Know About IBM’s Sinking Stock

141020_INV_IBM
Niall Carson—PA Wire/Press Association Images

IBM's shares plunged 7% Monday after a disappointing earnings report. Can tech's ultimate survivor transform itself one more time?

International Business Machines INTERNATIONAL BUSINESS MACHINES CORP. IBM -3.4713% has long enjoyed a unique status on Wall Street — a tech growth powerhouse that investors also see as a reliable blue chip, with steady profit growth and a hefty dividend. But with the rise of new technologies like cloud computing, Big Blue has struggled to maintain that balancing act.

Now investor confidence has suffered a big blow.

On Monday the company announced the results of a pretty lousy quarter. IBM’s third-quarter operating profit was down by nearly one fifth, and the company failed to generate year-over-year revenue growth for the 10th consecutive quarter.

Big Blue also revealed plans to sell-off its struggling semiconductor business, a move that involves taking $4.7 pre-tax billion charge against IBM’s bottom line. Actually, it is paying another company to take this unit off its hand.

While CEO Virginia Rometty acknowledged she was “disappointed” with IBM’s recent performance, she’s also pledged to turn the company around, led in part by IBM’s own foray into the cloud.

Now, you don’t get to be a 103-year-old tech company without learning to adapt. That’s what IBM famously did in the ’90s, when the computer giant started to shift away from profitable PC hardware in favor of consulting and service contracts for businesses.

But Monday’s dismal earnings show just how hard repeating that trick could turn out to be.

Here’s what else you need to know about the stock:

1) You can’t really call IBM a growth company anymore since its sales aren’t rising.

When it comes to revenues, IBM ranks behind only Apple APPLE INC. AAPL 2.7165% and Hewlett-Packard HEWLETT-PACKARD CO. HPQ 2.7203% among U.S. tech companies. On a quarterly basis, though, sales have actually shrunk for 10 periods in a row, including a 4% slide in the third quarter. The big culprit is cloud computing, in which businesses can access computing services remotely via the Internet.

Since the 1990s, IBM’s model has been premised on selling powerful, expensive computers to large businesses, then earning added profits on contracts to help firms run those machines. But the cloud lets companies rent, not buy, this computing power. “You only pay for what you use,” says Janney Montgomery Scott analyst Joseph Foresi. The result: IBM’s hardware revenues sank 15% last quarter.

2) IBM is racing to be a leader in cloud computing, but with mixed results.

The company has identified four alternative areas of growth. One is the cloud, the very technology eating into IBM’s hardware sales. Big Blue has spent more than $7 billion on cloud-related acquisitions. It’s also going after mobile, IT security, and big data, the analysis of information sets that are too large for traditional computers. An example of that is Watson. IBM’s artificial-intelligence project, which won Jeopardy! in 2011, is being marketed to businesses in finance and health care.

These initiatives have promise, but IBM’s size is a curse. For instance, the company’s cloud revenues jumped 69% to $4.4 billion last year, but with nearly $100 billion in overall sales, “it’s hard to move the needle,” says S&P Capital IQ analyst Scott Kessler.

3) The stock is now much cheaper than its tech peers, but it may deserve to be.

Investors willing to wait and see if these moves will transform IBM may take comfort in the fact that the stock looks cheap. What’s more, the shares yield 2.4%, vs. 2% for the broad market. This could make the company look like a good value.

But investors should tread carefully, says Ivan Feinseth, chief investment officer at Tigress Financial Partners. He notes IBM has spent $90 billion on stock buybacks in the past decade, which has kept the P/E low by increasing earnings per share. Yet none of that money was invested for growth, as evidenced by IBM’s sluggish annual growth rate. It is hard to imagine IBM outmuscling Amazon AMAZON.COM INC. AMZN 2.9783% , Cisco CISCO SYSTEMS INC. CSCO 2.5294% , Microsoft MICROSOFT CORP. MSFT 1.8149% , HP HEWLETT-PACKARD CO. HPQ 2.7203% , and Google GOOGLE INC. GOOG 1.0944% in the cloud — and there are better values in tech.

MONEY mobile payments

These Are the Stores That Accept Apple Pay

a cash register terminal promotes usage of the new Apple Pay mobile payment system at a Whole Foods store in Cupertino, Calif.
Whole Foods is jumping on the Apple Pay train. Eric Risberg—AP

Apple Pay is going live today. Here's where you can use it.

On Monday, Apple fans everywhere will finally get their hands on Apple Pay, the company’s new mobile payment solution that promises to turn your iPhone into a wallet. The product sounds great, but where can we actually try out this magic future technology?

The answer is probably, not at just any store. Apple Pay relies on near-field communication (NFC) technology to securely transmit your payment details, meaning businesses must have a special sensor installed at checkout for the system to work. Over time, more shops will likely upgrade their terminals, but as of now, only 220,000 locations are Apple Pay compatible. That’s about 2.4% of the roughly 7 million to 9 million merchants in the U.S. that accept credit cards.

But fear not, early adopter. iCEO Tim Cook has made sure those stores that do accept Apple Pay are probably the ones you use the most. Once you’ve set up Apple Pay to work on your device, head down to any of these chains and give it a whirl.

Clothes

  • Bloomingdales
  • Aéropostale
  • Champs
  • Macy’s

Footwear

  • Foot Locker
  • Kids Foot Locker
  • Lady Foot Locker
  • Footaction
  • Nike
  • House of Hoops
  • Run by Foot Locker

Sportswear

  • Champs
  • Sports Authority
  • Six:02

Technology

  • RadioShack
  • Apple Store

Pets

  • Petco
  • Unleashed

Pharmacy

  • Duane Reade
  • Walgreens

Gas

  • Chevron
  • Texaco

Food

  • McDonalds
  • Whole Foods
  • Panera Bread
  • Subway
  • Wegmans
  • ExtraMile

Office

  • Office Depot

Big Box

  • BJs

Kids

  • Toys R Us
  • Babies R Us

 

Apple
Screen Shot 2014-10-20 at 10.12.05 AM
Apple

 

 

 

TIME Gadgets

How to Set Up Apple Pay on Your iPhone or iPad

Get ready to shop like you never have before

Apple Pay, the newest “next big thing” out of Cupertino, hits shopping carts across the U.S. Monday both online and in stores. Paying with a swipe of your smartphone? That sounds like the stuff of the future. Or the stuff of Android phones since 2011. Or the stuff of Japan as far back as 2004. Regardless, it’s still a welcome leap for the 42.4% of American smartphone users who own an iPhone.

Here’s how to set up Apple Pay, the company’s new cashless, cardless way to pay.

Step 1: Get the right iDevice.

To use Apple Pay, you’ll need one of Apple’s latest devices, either an iPhone 6, iPhone 6 Plus, iPad Air 2, or iPad Mini 3. (Funny how it always works like that.) Older Apple mobile devices lack the new Secure Element chip, which encrypts and stores all the user’s payment information. So, even though the iPhone 5S has Touch ID, owners of that device still need to pay the old-fashioned way.

People with new iPhones can use Apple Pay for online transactions and in-store payments, while the iPads announced last week can only use the service for web purchases. That’s because the iPhones have a built-in Near Field Communication (NFC) antenna, which let users pay with a wave of the smartphone, while Apple’s tablets still lack NFC.

Step 2: Download the iOS 8.1 Update

Next, you’ll have to update your iPhone’s operating system to iOS 8.1, due to be released Monday. Not to be confused with iOS 8.0.1, the update that crippled thousands of iPhones in its brief reign of terror, iOS 8.1 includes an array of anticipated features, like Apple Pay and the return of the Camera Roll.

Step 3: Open the Passbook App

Flick to the barren wasteland of your second or third homepage — or wherever else you’ve stuffed Passbook, since like most people, you probably rarely use it. Upon opening the app to set up Apple Pay, it will ask if you want to use your credit or debit card already on file for iTunes purchases or add a new card.

Step 4: Pick a Card, Not Quite Any Card

For those of you who opt not to use your iTunes account, Apple Pay currently works with Visa, Mastercard, and American Express. If you’re nervous about this newfangled technology, but too tempted to stay away, it might be wise to use a credit instead of a debit card so you won’t be out any cash should things go awry.

A cadre of cooperating banks were revealed at the service’s unveiling, including Bank of America, Barclays, Capital One, Chase, Citibank, Navy Federal Credit Union, PNC, US Bank, USAA, and Wells Fargo. If your bank isn’t listed here, it still may be a part of the service. Everyone wants to party with Apple, and other banks have signed on since the service’s announcement in September.

When you ask Passbook to load a new card into Apple Pay, it activates your iPhone’s camera and prompts you to snap a photo of your card. Apple analyzes this image and interacts with your bank to confirm that it indeed belongs to you. Once that magic happens, a generic-looking image of your card appears in your Passbook app. Just tap on it when you want to use it.

It’s worth noting that the Passbook app doesn’t display your card number. Apple doesn’t even actually store your credit card number, nor does it give the number to merchants. Instead, Apple Pay creates a “device-only account number” which is stored on your device’s Secure Element chip. Every time you use Apple Pay, Apple issues a one-time payment number and a dynamic security code — both encrypted — to the bank. And not only does Apple not know what you bought, where you bought it, or how much you paid for it, but cashiers won’t be able to see your name, credit card number or your card’s security code when you making in-store purchases — a big improvement in real-world security.

Step 5: Shop

If you want to put your iPhone to the real world retail test immediately, there are already 220,000 locations ready to take Apple Pay. According to Apple, every Macy’s/Bloomingdales, McDonalds, Staples, Subway, Walgreens/DuaneReade, and Whole Foods are among the retailers already equipped to accept these contactless payments. And, of course, Apple Stores are also ready to take your money. Just wave your phone at the NFC terminal, touch your iPhone’s Touch ID sensor and wave your money goodbye.

Apple Pay

Meanwhile, shopping online sounds a little more complicated. Every online purchase demonstrated in the Apple Pay presentation went through an iOS app. So, whether you’re buying something from Target, accepting an offer from Groupon, or ordering a sandwich from Panera Bread, you’ll need to download the company’s app first. It’s unclear at this time if you will be able to use Apple Pay when shopping through a mobile browser like Safari or Chrome. But given Apple’s app-centric view of the Internet, I wouldn’t put any money on it.

But there is a plus side: in exchange for downloading and using these apps, after you pay with your fingerprint on the Touch ID sensor, you don’t have to enter your billing or shipping address, which can be a drag — especially when you’re shopping online using an iPhone or iPad.

Read next: These Are the Stores That Accept Apple Pay

TIME technology

Why Apple Pay May Be the Company’s Most Challenging Move Yet

For Apple Pay to work, Apple needs to get customers, retailers and banks all in lockstep

Our smartphones have already become our de facto camera, music player, navigational device and personal assistant. Now Silicon Valley wants to make them our wallet, too.

Several tech firms have spent the last few years trying to convince consumers their phone is a more convenient payment method than cash or plastic. Most shoppers have balked. But on Monday, Apple is entering the fray, and experts say that could be a turning point for the long-hyped mobile payments industry.

Apple’s service, dubbed Apple Pay, allows customers to buy goods in physical stores with a simple tap of their iPhone 6, iPhone 6 Plus or Apple Watch smartwatch, when that device hits shelves in early 2015. Apple Pay users load their credit card information onto the phone, then press their device’s Touch ID fingerprint scanner in the checkout line to authenticate the purchase. The process is faster than using a debit card — and more secure. Apple generates a unique ID number for each transaction, meaning users’ credit card data numbers are not shared with merchants.

Apple Pay is launching just as the smartphone is becoming a central point of commerce for the average shopper. Consumers spent $110 billion via their mobile devices last year, according to research firm Euromonitor, and they used their phones plenty more to research products before buying them in stores. Meanwhile, person-to-person payment apps like Venmo have made people comfortable loading their phones with dollars to make simple transactions.

“All of that is really conditioning consumers to trust their phones when it comes to payments,” says Michelle Evans, a senior consumer finance analyst at Euromonitor.

But consumers are still reluctant to give up their credit cards. Mobile payments generated $4.9 billion in sales in 2014, a paltry figure compared to the year’s $4.8 trillion in card transactions, according to Euromonitor. Google’s own mobile payments service, Google Wallet, offers much of Apple Pay’s functionality but hasn’t seen widespread adoption. Startup Square abandoned its much-hyped mobile wallet platform earlier this year, instead pivoting to an order-ahead service like Seamless. PayPal, which is spinning off from eBay in 2015, has also struggled find a mobile formula that works in stores.

“It’s definitely starting to catch on, but I don’t think anybody has quite nailed the overarching reason to pull out your phone to pay,” says Anuj Nayar, PayPal’s senior director of global initiatives.

The transition to mobile payments is a challenging one because it requires buy-in from so many different players. Consumers have to be convinced it’s worth their time to learn a new buying behavior. Retailers have to pay for new equipment so their point-of-sale systems can accept payment from phones and smartwatches. Banks and credit card issuers also have to buy in. “It’s a lot of people to get in lockstep,” says Evans.

Apple does have a few key advantages over its competitors. The company has a knack for convincing people to change their digital lifestyles, whether by downloading MP3s, surfing the web on a phone or using a large tablet to watch videos. And thanks to the iTunes Store, Apple has more than 500 million credit cards already on file. Those customers will be able to seamlessly start using the same accounts they use to buy apps and music to buy goods in the real world when they first boot up Apple Pay. “We’ve never had this large of a base in a starting country” for a mobile payment system, says Matt Dill, Visa’s senior vice president for Innovation & Strategic Partnerships, Commerce and Network Payments.

However, analysts say convincing shoppers to give up credit cards, which are already fairly painless to use, will take more than just offering convenience. The most successful mobile payments platform to date is the Starbucks app, which rewards customers who pay via their phones with free drinks and other perks. Today, Starbucks processes about 15% of all its transactions on the app, or about 6 million per week.

“The customers really feel It’s not just about payments,” says Ben Straley, Starbucks’ vice president for digital products. “It’s also about being rewarded for their loyalty.”

But even if Apple can convince consumers to take their money mobile, some merchants aren’t playing ball. Wal-Mart, America’s largest retailer, won’t support Apple Pay at launch. Instead, it and other big-box stores like Best Buy are developing a competing mobile payments platform called CurrentC, set to launch sometime next year. Such merchants would have to be the driving force behind any effective loyalty rewards program that convinced shoppers to abandon their credit cards.

With so many competitors offering mobile payment options, analysts expect the segment will finally take off soon. Euromonitor projects in-store purchases via phone will rise to $74 billion by 2019 — though that’s still a far cry from the trillions in card purchases we see today. Mobile devices are already becoming a common tool for buying things in the virtual world. It could very well happen in the real world, too. “It’s just shopping, whether you’re buying it in a store or buying it online,” says PayPal’s Nayar. “The lines between what that looks like have started to disappear.”

Read next: Apple Pay Starts Monday for iPhone 6 Users

TIME Apple

It’s Time to Seriously Start Expecting an Apple TV Again

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Images by Fabio—Getty Images/Flickr RF

Everything finally looks like it is falling into place

Apple’s Oct. 16 “It’s been way too long” event was supposed to be all about updating products that hadn’t been refreshed in a while. And it was. The Cupertino, Calif. company unveiled svelte new iPads, an ultra-high-resolution version of the iMac, an updated Mac mini, and a slew of software and service updates. CEO Tim Cook also said that a software development kit to help programmers make applications for the company’s upcoming smartwatch would be available in November, ahead of the much-anticipated device’s 2015 debut.

About ten minutes into his opening remarks, Cook put up an evolution of man-style slide showing Apple’s line of products, from the Watch through iPhone and iPad, laptops and desktops. (Scrub to 10:00 here to see it.) One could easily imagine the same slide with an additional product on the far right: a television. That is a rumor that has been around for so long, that it’s frankly grown tedious to think or talk about. Steve Jobs told biographer Walter Isaacson before he died that he’d long wanted to make a TV and had “finally cracked” the difficulty of creating a simple user interface. And, earlier this year, Cook told Charlie Rose that television “is one of those things that if we’re really honest is stuck back in the 70s…this is an area we continue to look at.” (It’s also a product Apple already made, sort of, in the early 1990s.)

What’s changed is that television is more ripe for disruption as the ecosystem of companies around it—cable providers, content creators—try to position themselves for the future. And, arguably, Apple’s clout and ability to disrupt TV is greater than ever. A number of developments in the last couple of weeks have given the idea of an Apple television set renewed luster. Consider that:

Apple has the display. The television-making business is no picnic; just ask Sony, which has lost nearly $8 billion in the last decade on TV’s alone. But the new iMac’s display—which has an extremely high resolution—is the kind of game-changer that consumers might be willing to spend more for.

Apple is calling the display a Retina 5K screen. The high-end 27‑inch iMac has four times as many pixels as the regular 27‑inch iMac display, some 14.7 million pixels. The company created its own timing controller to drive all those pixels and is using a new type of screen technology, an oxide TFT-based panel, to deliver extra brightness.

Cable companies are starting to unravel. Two back-to-back announcements this week suggest the television content business is starting to change. This had been Apple’s biggest obstacle to creating a television device with a radically better way of watching stuff. As my colleague Victor Luckerson put it earlier this week:

By making these channels available for purchase individually, CBS and HBO are embracing the “a la carte” TV model, in which viewers would be able to select the individual channels they want to pay for and ignore the rest. It’s a concept that makes intuitive sense in a world where songs, movies, books and news can be consumed individually, on the go and at little cost. But the model poses a huge threat to cable operators, network owners and even subscribers. If every network did what CBS and HBO are doing, cable and satellite operators would have the core part of their businesses wiped out.

HomeKit is the new “digital hub.” In 2001, Jobs organized the then-struggling company around a new strategy. The computer would become the hub for consumers’ various devices, cameras, music players, video recorders, et cetera. It worked. Today, Apple is working on HomeKit, a framework that lets the company’s devices control smart gadgets around your house. (For more on the smart home, read all of this special TIME issue.) One of a future Apple television’s killer features could be acting as a central nervous system for all the wired lightbulbs, thermostats and so on in your house.

Consumers want it. The current product called Apple TV, a $99 set-top box that can pipe in streaming content from iTunes, Netflix, Hulu and other digital service providers, was denigrated as a “hobby” product by Steve Jobs in 2007. Last month, Cook said the device had gone far beyond that status and has some 20 million users.

And finally, Tim Cook’s Apple is ready. The company has shown it is willing to sign the death warrant for technologies it no longer finds useful. Not to mention place big bets in brand new areas where its success is far from guaranteed. Cook said this was “the strongest lineup of products Apple has ever had and soon you can wear that technology right on your wrist.” I wouldn’t be surprised to find that amended to add the center of the living room.

TIME Gadgets

The Revolutionary New iPad Feature Apple Didn’t Talk About

Apple Inc. Announces The New iPad Air 2 And iPad Mini 3
A member of the media displays an Apple Inc. iPad Mini 3, left, and iPad Air 2 for a photograph after a product announcement in Cupertino, California, U.S., on Thursday, Oct. 16, 2014. Bloomberg—Bloomberg via Getty Images

It could foretell a future where consumers have unprecedented choice over their mobile carrier

Apple unveiled a pair of new iPads during a somewhat subdued event Thursday at its Cupertino, Calif., headquarters. At first, it seemed there was nothing groundbreaking about the iPad Air 2 and iPad mini 3 — these were somewhat boring, iterative improvements like thinner bodies, faster processors and the inclusion of Touch ID. But one feature of the iPad Air 2 that Apple didn’t even talk about on stage represents a change that could foretell a future where consumers have unprecedented choice over their mobile carrier.

The WiFi + Cellular models of the iPad Air 2, as revealed only on Apple’s website after Thursday’s event, comes with something called an “Apple SIM.” SIM cards are small, rectangular devices used by many mobile carriers to identify customers on their networks. If your mobile carrier uses SIM cards, you can switch your service to another device simply by popping the card out of your old device and putting it in your new one. It’s also possible in many cases to bring your old device to a new mobile carrier by getting rid of your old SIM and replacing it with a card supplied by your new carrier — a common practice among travelers, who have to hop from carrier to carrier as they cross from one company’s territory into another’s.

What the new Apple SIM changes is that iPad Air 2 owners who want to bring their device from their current mobile carrier to a new one no longer have to get a SIM card from their new carrier. Instead, switching carriers is as simple as selecting the new company from a menu option on their iPad, provided the carrier is one that currently supports Apple SIM — AT&T, Sprint, T-Mobile and European carrier EE, for starters.

“The Apple SIM gives you the flexibility to choose from a variety of short-term plans from select carriers in the U.S. and U.K. right on your iPad,” Apple wrote on its website for the iPad Air 2. “So whenever you need it, you can choose the plan that works best for you — with no long-term commitments.”

That sounds pretty nice for iPad owners, but what about iPhones? For now, Apple SIM is only found in iPads with wireless data capabilities, which serve a much different function than phones. But it’s not hard to imagine a future where Apple puts its Apple SIM in every iPhone on the market, making it that much easier to change your wireless carrier on the fly. As Quartz noted Friday:

A more compelling, user-friendly scenario might see your phone number and crucial services—messaging, voicemail, etc.—tied to your Apple SIM, and a vibrant marketplace where carriers compete for your business. This is already sort of what Apple is about to offer for the iPad.

Imagine booting up your iPhone for the first time and seeing four competing offers for your business from different operators—with short or no contract duration.

That sounds really nice, but it’s still far from reality. Some mobile carriers may be happy to experiment with the Apple SIM for tablets like the iPad, but their contractual chokeholds on cellphone owners are far too lucrative for them to loosen up easily — and, notably, America’s biggest mobile carrier, Verizon Wireless, is absent from the Apple SIM iPad plan (though, for historical and technical reasons, Verizon was slow to embrace SIM cards at all). Apple did not immediately respond to a question regarding whether it will put the Apple SIM in iPhones.

The future of how you pick and choose from mobile carriers will ultimately depend on how far Apple is willing to go to break up the status quo. If the tech giant truly does want to rid the world of the two-year contract, it’ll need the carriers’ cooperation, even if reluctantly given, to do so. Apple has power here: It could conceivably threaten to pull the iPhone from any carriers that don’t play ball with Apple-SIMs-in-iPhones, using its devices’ popularity with consumers as a means of squashing dissent. But Apple’s theoretical plan here can also be beaten: If the carriers band together in refusing the idea, it would go nowhere fast.

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