What Will Apple's Next iPhone Killer Feature Be?

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Samsung's Galaxy S4 unveiling last week was considered a disappointment. Shares of the South Korean conglomerate fell 2.6% the next day while primary rival Apple (NASDAQ: AAPL  ) enjoyed a nice rally. While Samsung showed off a myriad of new software features, some aimed at new interfaces such as Air View or Smart Scroll, most were perceived to be rather gimmicky and fell short of being must-have characteristics. Is that an opportunity for Apple?

Morgan Stanley analyst Katy Huberty believes it is, saying the "innovation cards are up for grabs" following the Galaxy S4's underwhelming debut. The analyst notes that the Galaxy S4 lacked any "killer feature" to really drive a big demand boost. That absence can potentially give Apple a big opening when it launches its next iPhone later this year, and the presumed "iPhone 5S" will likely be all about a killer feature that will bring more consumers into iOS.

Siri, Apple's voice-controlled assistant, was arguably Apple's last big attempt at a killer feature. Say what you will about Siri not living up to Apple's marketing hype, and I'll wholeheartedly agree, but what investors can't dispute is that the iPhone 4S (the first model to offer Siri) had surprisingly strong sales, despite early criticism that the device was an incremental "S" upgrade.

What does Apple have up its sleeve for the 2013 model? Huberty believes it will involve tapping the "value of those 500 million accounts," referring to active iTunes payment accounts with credit cards on file. Apple has been surprisingly quiet as mobile players jump on payment solutions, opting instead to merely offer a Passbook app last year that has obvious digital wallet implications.

Investors also know that Apple acquired AuthenTec last year for $356 million, a company that specialized in fingerprint sensors and other security offerings. Less than six months later, Apple sold off AuthenTec's embedded security solutions and stopped selling its identity management products, showing that the fingerprint technology was clearly what Apple was after.

KGI Securities analyst Ming-Chi Kuo sees a fingerprint sensor being integrated into the iPhone 5S home button, adding a new and differentiated layer of security that other smartphones don't offer. By the looks of it, Apple's 2013 killer iPhone feature may be a new mobile payments solution that only your fingerprint can access.

There is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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  • Report this Comment On March 18, 2013, at 8:32 PM, cskusc wrote:

    Apple bought the fingerprint technology because it was behind the PC industry as this is common item in many of laptops. Some Android device makers also added on their Phone and Tablets. Apple saw that coming so they bought the technology, I am surprise someone would say that they innovated here.

    Pretty funny. If this is all Apple has to offer, then this will be killer feature for sure (for Apple).

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