by Brad Moon | April 9, 2014 4:39 pm
This is the time of year when rumors about new iPhones run rampant, but 2014 is shaping up to be especially interesting for Apple (AAPL). That’s in large part thanks to recent speculation that AAPL will release not one, but two new iPhones — both bigger than current offerings, no less! — instead of a single iPhone 6.
And with yet another report claiming the new iPhone will consist of 4.7-inch and 5.5 inch models, it’s looking more likely than ever that going bigger and doubling down is the route AAPL plans to take in 2014.
So … why two new iPhones?
I think it comes down to three has reasons: market demand, hedging bets and wanting to avoid looking like a follower instead of an innovator.
Smartphone display sizes have been steadily growing for years. In 2007, when AAPL launched the new iPhone, its 3.5-inch display was described as “giant.” Which, sure it was next to competing devices from the likes of BlackBerry (BBRY).
However, smartphones kept growing, and Apple didn’t keep up. AAPL did eventually move to a 4-inch display with the iPhone 5, but the company has fallen further behind as smartphones running Google’s (GOOG) Android, Microsoft’s (MSFT) Windows Phone and even the BlackBerry Z30 have reached screen sizes of 5 inches or greater.
And Samsung (SSNLF) took things to extremes, popularizing a new category of super-sized smartphones — phablets — that are close to tablets in size.
Documents made public during the latest Samsung vs. AAPL court battle show that Apple recognizes smartphone growth is happening in big-screen devices, not the 4-inch category where the last three new iPhone models have remained.
Bottom line: AAPL has to go big with its new iPhone 6 (or 6s) if it wants to stay at the forefront of mobile.
Releasing a big, new iPhone 6 alongside another new iPhone 6 version that’s just a bit larger than the current iPhone 5s lets AAPL hedge its bets.
With a 5.5-inch iPhone 6, Apple would be bigger than most flagship smartphones and competitive in the phablet market at the same time.
Meanwhile, the 4.7-inch iPhone 6 still would be significantly smaller than 5-inch Android flagship smartphones. But that would give Apple access to demographics that might find the big phones to be too much.
Manufacturers have tried software and user interface workarounds to accommodate smaller hands, and many have quietly released smaller versions of their flagship devices: the Samsung Galaxy S4 Mini, HTC One Mini and the Sony (SNE) Xperia Z1 Compact — a CES 2014 standout.
Clearly the demand is still there. And AAPL would remain a key player in this segment with a new iPhone that isn’t too big,
Finally, if there’s anything Apple doesn’t want and can’t be afford, it’s to be seen as a follower.
Apple prides itself on innovation.
When forced to concede the point that consumers wanted smaller tablets, Apple intentionally skipped the 7-inch form factor popularized by competitors and released the 7.9-inch iPad Mini — with 35% more display area than those Android tablets. In other words, it didn’t rush into smaller and follow the lead; it innovated and “improved” on the 7-inch tablet experience.
A new iPhone with a 5.5-inch display would let Apple lay claim to innovating by exploiting the size between 5-inch flagship smartphones and 6-inch phablets, clouding the obvious conclusion that it’s following Samsung’s lead. It would be positioned as superior to a phablet, as well as being the biggest mainstream flagship smartphone.
Innovation, not following.
Of course, the 4.7-inch iPhone 6 would be backed up with studies showing AAPL has picked the ideal size for this smaller form factor, too.
By the way, Apple has released two new iPhones before. Last year, Apple released the iPhone 5c and iPhone 5s — but they were superficially different to many smartphone shoppers.
A move to have two new iPhone models that are dramatically different in form factor would be something new in its iPhone business. But Apple currently has a similar size divide in its iPad line-up, so the move isn’t without precedent.
The complication this time around is the possibility that the smaller new iPhone 6 will be released before the larger one because of manufacturing constraints.
That leads to some important questions:
Will people buy a near phablet-sized iPhone 6? Will they buy a new 4.7-inch iPhone 6 if it’s released first? Or will they wait until the 5.5-inch model is also available before making any purchase decision?
After a string of record-breaking launch weekends, a smartphone landscape that’s more competitive than ever and pressure to keep up with a “bigger is better” mobile industry mentality, the iPhone 6 generation will have a lot riding on it when Apple finally makes its launch announcement.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
Source URL: https://investorplace.com/2014/04/new-iphone-6-aapl/
Short URL: http://invstplc.com/1iyorfg
Copyright ©2017 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.