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Apple's Phabulous New Idea

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Apple (NASDAQ: AAPL  ) had a triumphant launch for the 5s and 5c, selling more than 9 million iPhones during the opening weekend. While this was, by far, the most successful launch for the iPhone ever, rumblings still persist that the company can't grow the way it once did. However, Apple appears to have a trick up its sleeve for growth. Samsung (NASDAQOTH: SSNLF  ) should be on notice.

Small, medium, and large?
According to analyst David Hsieh, Apple is planning to release a larger iPhone next year. The current 5s registers 4 inches and is among the smallest of the major manufacturers' flagship phones. You can be sure that Jony Ive is aware of this, and early indications are that the next iPhone will come with a 4.7-inch display.

However, the interesting story is that Apple is working on a phablet in addition to a larger iPhone. After performing a thorough analysis of Apple's supply chain, Hsieh concluded that Apple will introduce a new phone that measures 5.7 inches, a phablet rivaling Samsung's Galaxy Note 3. With a heavy hitter like Apple competing in this space, Samsung needs to innovate to keep its "top dog" status in phablets.

A product with a purpose
Apple fans have been split with the idea of a phablet, many considering the idea gimmicky and others aware that there is a demand for them. Apple's generally kept above the cacophony, but one word has changed its mind: China. Demand for phablets is exploding in Asia, and it's no secret that Apple has been eyeing China as its next growth market.

Source: Business Insider.

When matters of cooperation matter
Apple CEO Tim Cook recently met with China Mobile (NYSE: CHL  ) Chairman Xi Guohua to "discuss matters of cooperation." The meeting has apparently paid off; according to Engadget, China's equivalent to the FCC recently released documents clearing a pair of iPhones that appear to be the 5s and 5c for China Mobile's network. Getting the certification is one step toward growing in China. And, as you can see, it's a very big step, considering China Mobile's lock on the Chinese market.

The right product at the right time. What could go wrong?
Apple should be commended on its approach to China, but it still has one major obstacle to overcome: price. The 5c costs more than $700 in a country that averaged annual income of $2,100 in 2012. One can assume a phablet will sell for more than that price, so affordability will be a factor. Also, competition from Samsung and local company Xiaomi will continue to be a factor. However, this should reassure Apple investors that Tim Cook is looking for growth; the question is, can he deliver?

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9/29/2016 4:00 PM
AAPL $112.18 Down -1.77 +0.00%
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