New iPhone From Apple Rumored to be a Small Smartphone

Advertisement

After being hammered for years over its reluctance to increase the size of its smartphones, Apple, Inc. (AAPL) released the big iPhone 6 and even bigger iPhone 6 Plus this year. Given the consumer demand for phablets, it was no surprise Apple caved.

new iPhone to be a small smartphone
Source: Apple

What might be surprising is the rumor coming out of Taiwan (and first reported on GSM Arena) that AAPL is working on a new iPhone with the same 4-inch display people complained about for years as being to small.

Given the success of the Apple iPhone 6 and 6 Plus, it may seem strange that AAPL would invest in developing a new iPhone that’s smaller, but the move makes sense.

Some Prefer a Small Smartphone Over a Phablet

Competitors like Samsung Elect Ltd(F) (SSNLF) and Sony Corp (ADR) (SNE) released flagship smartphones with displays larger than 5 inches earlier this year, helping to fuel the cry that Apple had no choice but to release a big new iPhone.

However, two of the most critically acclaimed devices these two companies offered this year were small smartphones: the Samsung Galaxy Alpha and the Sony Xperia Z3 Compact.

These phones addressed two issues that phablet proponents have overlooked:

  • Half of the market is women and women tend to have smaller hands. The same is true for tweens and teens, another often overlooked smartphone-toting demographic.
  • Even for someone with large hands, a big smartphone can be virtually impossible to operate with one hand.

Smartphone makers have tried various software schemes in an attempt to make it possible to use their phablets with a single hand. Apple added a “Reachability” feature for the new iPhone 6 Plus that essentially shifts everything down to the bottom two thirds of the display so it can be reached by the average thumb. Samsung miniaturizes the entire display and puts it in the lower corner of its big smartphones.

These software fixes are a little kludgy. For one thing, you lose much of the big screen advantage of the bigger smartphone when you essentially chop off a big chunk of its display for one-handed operation. It also doesn’t address the issue that the large physical size remains. A small smartphone fits more comfortably in the hand and slips more easily into a pocket.

New iPhone Would Replace iPhone 5c

When you look at the iPhone 5c, iPhone 5s and the new iPhone 6 and 6 Plus, there’s something more than size that catches the eye.

The previous generation Apple iPhone models look nothing like the new iPhones. Apple is big on design continuity and it’s pushing that concept harder than ever with its mobile devices. Look at the iPad Air 2 and iPad Mini 3 beside the latest iPhones and you can see the convergence.

Releasing a new iPhone with a 4-inch display lets Apple push out the iPhone 5c –the most obvious example of “something doesn’t belong here” in the current iPhone line-up.

As Forbes’ Gordon Kelly points out, a new iPhone with the same visual look as the iPhone 6 and 6 Plus unifies the iPhone line-up and it could replace both older iPhones as the new budget model.

The upgrade would also ensure Apple has a competitive small smartphone option into the future (remember, the A7 in the iPhone 5s and A6 powering the iPhone 5c are already a generation or more behind).

Arguments Against a Smaller Apple iPhone?

Not everyone is convinced the rumor of the new iPhone has any basis in reality. Arguments against Apple releasing a new small smartphone usually follow one of two themes:

  • Demand for big smartphones is huge, and backed up by hard data. IDC says phablet sales increased by 209% in 2014 while regular smartphone sales rose by just 12.8%. Releasing a small smartphone that bucks the numbers is risky.
  • Apple likes to keep things simple. By releasing the iPhone 6 and iPhone 6 Plus, it already has two smartphone options and compared to the 5-inch displays found in most Android flagships, the 4.7-inch  iPhone 6 is already a small smartphone. Why complicate the product line by introducing a third new iPhone?

The China Factor

The Chinese market represents a huge growth opportunity for Apple and competing smartphone manufacturers. Here, Apple again faces a tough choice.

Phablets first got their start in the Asian market and they are extremely popular in China, where they fill the dual role of smartphone and tablet and often take the place of a PC as well. A small smartphone like the rumored 4-inch Apple iPhone wouldn’t be able to do all of that.

On the other hand, per capita income in China is a fraction of that in the U.S, and the iPhone 6 and 6 Plus are expensive. Apple has faced frequent calls for a new “iPhone Mini” to offer a cheaper alternative for the Chinese mass market. A new iPhone in 2015 with a 4-inch display could be that affordable small smartphone for the Chinese market.

The Bottom Line

Apple likes to keep everyone guessing. The rumor of a small Apple iPhone in development is just that — a rumor. Based on history, we won’t know for certain that Apple is working on another small smartphone until next new iPhone reveal in the fall of 2015 (assuming Apple sticks to its usual release schedule).

But it certainly makes sense to me.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

More From InvestorPlace

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2014/12/new-iphone-small-smartphone/.

©2024 InvestorPlace Media, LLC