Will Apple, Inc. Launch Two New iPhones With Larger Displays?

In the past, the trend in tech was smaller and smaller. Apparently, however, that trend is now reversing. Perhaps it started with Dr. Dre's Beats headphones? Wherever it started, the trend has made its way to smartphones, and even Apple (NASDAQ: AAPL  )  now may be joining in, according to The Wall Street Journal. Apple has plans for two larger iPhones in 2014, one larger than 4.5 inches which is "further along in development, and is being prepared for mass production," and one larger than five inches that "is still in preliminary development," according to the WSJ. Will larger iPhone displays resonate with customers?

iPhone 5s displayed in Apple retail store.

First, let's take a look at the latest rumors for Apple's iPhones in 2015.

Summing up the latest iPhone 6 rumors
The rumor mill continues to suggest that Apple will launch a bifurcated iPhone lineup in 2014. Back in November, Bloomberg asserted that Apple was working on two larger iPhones, and now the WSJ says that "people familiar with the situation" are confirming that this is the case. But the Journal's new report adds a few new details for the rumor mill to chomp on.

  • Contrary to what Bloomberg said in November, Apple will not use curved glass in the new iPhones, the WSJ asserts. Instead, the phones will "feature metal casings similar to what is used on the current iPhone 5s."
  • Further, Apple "is expected to scrap the plastic exterior used in the iPhone 5c." The WSJ eludes that less-than-expected demand for the plastic phone could be the reason for this move.

A hot market for larger displays
While many current Apple customers may have a tough time imagining using a larger display like those found in Samsung's Galaxy lineup, there is an undeniable global market for the larger phone. In fact, of the estimated 251 million smartphones that shipped in Q3, 56 million had displays of five inches or larger, according to research firm Canalys. 

A move to larger iPhone displays echoes Apple's recent emphasis on the Chinese market with the China Mobile deal. Canalys predicts the Asia-Pacific region will lead global demand for large-display smartphones. One of the reasons consumers in this region appreciate larger smartphones, Canalys says, is because low home broadband penetration means Wi-Fi tablets are not always a feasible option. Consumers in the region, therefore, are resorting to larger smartphones, filling a tablet void while they're at it.

Canalys also predicts that in 2014, displays larger than Apple's current four-inch display will be the most popular worldwide, "as they offer the best balance of portability and crispness."

But what about the U.S. market?
The iPhone's smaller display size is more popular in the U.S. In fact, the iPhone alone accounted for 42% of the installed base of smartphones in Apple's domestic market in the fourth quarter of 2013, according to NPD. Even more, Apple's installed base in the U.S. is actually up seven percentage points from the year-ago quarter.

Considering that the U.S. is Apple's largest market, and that its Americas segment accounts for a whopping 37% of its revenue, a move to larger iPhone displays prompts an important question: Is Apple taking a risk by changing a proven formula? On the other hand, it's big leaps of evolution that have helped Apple succeed in the past, so maybe such a major change is the right thing to do.

What do you think? Does a larger iPhone make sense? Would you buy a larger iPhone?

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  • Report this Comment On January 23, 2014, at 10:56 PM, JHawkinTexas wrote:

    You make it sound like it's one or the other (big or small) in terms of size. It will be both. If Apple offers a slightly larger iPhone (maybe 4.8"), it will be in ADDITION to its existing 4" iPhone 5s/c line.

    The 5s is about to become the lower end phone. The new iPhone 6 (4") and iPhone 6 Air (4.8") will be the new flagship phones.

    Apple will also be coming out with an updated iPod touch, iWatch, and iTV (with 4K display). Along with incremental improvements in the ecosystem, competitors will find it nearly impossible to steal customers away from Apple's installed base. In the meantime, customers from Android will continue to trickle into Apple's fan base.

  • Report this Comment On January 24, 2014, at 3:19 AM, JbUps wrote:

    Good article but WS doesn't care how many or what size phones Apple sells. WS has convinced investors that Apple is nothing more than a hardware manufacturer of products that will eventually be commodities. As a user of Apple products all this is just noise. As of now I would never consider using anything else. But as an Apple investor this commodity narrative that has been establish is demoralizing. I think the larger phones and iPads that surely will come out this year will be as awesome as everything else Apple makes. With China M finally on board they will sell more products than ever. WS is not impressed however based on stock performance. Any increase in sales must come with reduced margins is the prevailing bear thesis. It doesn't matter if it's true because perception is reality and the perception has been established by the relentless barrage of bear attacks. IMHO, as an Apple investor, I would like to see them develope other streams of revenue beyond selling hardware like add dollars from search, monetize an iPayment feature, TV content delivery, etc... Yes the new phones, iPads, iWatch or whatever they come out with this year will all be great products that myself and other consumers will love but to reward investors they need to go beyond just making stuff. iTunes and App Store aren't getting it done.

  • Report this Comment On January 24, 2014, at 3:48 AM, CraigWPowell wrote:

    Is Apple making a comeback?

    $AAPL up more than +20% since this signal:

    http://seekingalpha.com/article/1614472-is-apple-making-a-co...

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