Apple's Larger iPhone Screen: Why Google Stands to Profit

See how Google shareholders benefit from the shift toward larger screen sizes.

Apr 11, 2014 at 2:19PM

As the rumors of a larger iPhone screen(s) reach a fever pitch, it's only natural to focus on all the new sales expected to come Apple's (NASDAQ:AAPL) way. The long-awaited moves, should they come to fruition, involve taking the core iPhone 4-inch screen, and upping the ante to a more functional 4.7-inch screen. Additionally, developing a 5.5-inch "iPhablet" is rumored to be in the cards.

The implication here -- as sales of Samsung's Galaxy and to a lesser extent, Note -- seem to support, is that a segment of people want larger screens. This certainly makes sense. Apple could be missing a piece of the mobile market that may actually prefer Apple products, but require more space to leverage their robust data packages and ever-interesting apps successfully on their mobile device.

So, aside from playing Angry Birds, what do these users tend to do on their phones?

Here's where we reverse course, and take a look at one company that might stand to benefit from users having a more functional mobile device.


With over 90% of Google's revenue still coming from core search products, Google stands to reap big rewards from any directional changes that improve the search experience. While a .7-inch increase (rumored for the iPhone 6) seems less than impressive on the surface, it represents a 17.5% increase in usable screen space. Additionally, and even more importantly, it means Apple recognizes the need for screen size convergence, and the consumer's basic desire to balance "it fits in my pocket" with "I use it to perform commerce-oriented activities."

Today, Adwords advertisers anecdotally bid over 50% more for desktop, and tablet, traffic than they do for mobile traffic. The main reason for this is, quite simply, that traffic on smaller devices does not convert as well. It's simply more challenging to perform complex transactions on smaller screens. Hence, the value of a user on a small device is less than that of a larger-device user to the companies that power Adwords bids. Ultimately, this is the reason for the cost-per-click (CPC) disparity between mobile devices and their larger tablet brethren.

Larger screen sizes mean higher conversions. This leads to higher bids, more auction participants seeking mobile traffic, and higher average CPCs for Google. The biggest challenge Google has faced, in terms of improving mobile CPCs, has been the simple fact that smaller screen sizes underperform their larger counterparts for the companies that buy the traffic. 

What's the Foolish takeaway for Google investors?

Expect the larger iPhone screen to improve mobile monetization for Google as Adwords advertisers benefit from improved conversions. Clicks will become more valuable, and Google will take another step toward bridging the CPC gap between desktop traffic and less valuable mobile traffic.

A larger screen size, additionally, gives Google engineers more space to optimize their search results set. Time has shown that Google is quite skilled at placing quality ads, powered by profitable advertisers, in front of an enabled audience. All three of these criteria improve with additional screen space.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

Matt Leonard currently owns Google (C shares). The Motley Fool recommends Apple and Google (C shares). The Motley Fool owns shares of Apple and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.


Compare Brokers