Late on Fri. night, the iOS 11 GM (golden master) software build was leaked to two Apple rumor sites, confirming several new Apple products:

• iPhone 8 and iPhone 8 Plus: Updated versions of Apple’s 4.7″ and 5.5″ iPhones with LCD displays and the traditional home button.
• iPhone X: An all new 5.8″ iPhone with an edge-to-edge OLED display, no home button (instead using Face ID for unlocking), advanced AR-related sensors and cameras, and potentially wireless charging.
• Apple Watch with LTE: A new Apple Watch with iPhone-less connectivity and dramatically increasing usability.  We believe this will add about 2% to our Apple growth rate in FY18. Details below.
• AirPods: Minor updates to Apple’s wireless headphones, perhaps to increase production output and/or yield, and approach supply/demand equilibrium faster.
• Bonus: New Wallpapers (here) to show off the new OLED display on the iPhone X.

image source: iDrop News

Augmented Reality Capabilities. While the new hardware will draw the most attention, the most significant change with long-term implications is the addition of 3D sensing capabilities that enable augmented reality applications (also likely to be included on new iPhone and iPhone Plus models). While AR applications will be backward compatible to the 2015 iPhone 6s, the addition of designated 3D and computer vision hardware on the iPhone Pro would be a big step toward putting AR in the hands of everyday users. It would also a big step toward the next generation of computing – beyond the smartphone.

Apple Watch LTE Will Inch Apple’s Growth Rate Higher. Adding LTE is a step function increase in utility of Apple Watch, and something that consumers have asked for since Apple Watch launched in April of 2015. You no longer need your iPhone with you to make calls, get messages, or stream music. Think of Watch with LTE as a high end consumer’s iPhone for the weekend. There are still details around price, data plans and battery life (our biggest question) that will have a measurable impact on how we think about demand, but our first take is Apple Watch with LTE could add an incremental 10m-15m units a year to the Apple Watch business compared to about 15m units a year in FY17 (Sep) to 25-30m units in FY18.  Running that through our overall Apple model, and assuming the low-end 10m incremental LTE units would increase our FY18 growth from our current 12% estimate to 14%, compared to the Street which is currently expecting 14% growth. Street numbers will likely inch higher after Tuesday’s announcement. While Apple does not break out Apple Watch results, we estimate that it accounts for about 3% of revenue today.