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Here's Why Apple Should Launch iPhone 6 Early

In its most recent earnings report, Apple (NASDAQ: AAPL  ) reported blow-out numbers relative to its own guidance and the most optimistic of sell-side estimates. As a result, Apple's shares have been on an absolutely wonderful run. While it's clear that the iPhone 5s had a lot more juice in it than what many of us had believed even in light of the trend toward larger phones, Apple would still benefit immensely from launching the iPhone 6 early, as it has been rumored that it will.

Strike while the iron is hot
The iPhone 5s and even the 5c have enjoyed tremendous momentum since their launches last September. Apple's iOS 7 has been well received, and touch ID has proved to be a key differentiating feature against the various Android devices (even against ones with fingerprint sensors -- Apple's implementation still appears to be the best on the market). However, as the various Android vendors start implementing some of these features, Apple is going to want something new to drum up excitement -- the iPhone 6.

While we don't know a whole lot about the iPhone 6 officially, we can expect that it'll be bigger (4.7 inches and maybe a 5.5-inch model), faster, thinner, and even better than the iPhone 5s. In fact, the 4.7-inch size is likely to prove to be a nearly optimal compromise for those who still want one-handed operation but at the same time want more screen real estate. And, of course, Apple is sure to soup-up iOS 8 to take full advantage of what the new iPhone hardware will enable.

All of this adds up to a product that will be able to keep the momentum going.

Pouring cold water on the next-generation Android phones
While Apple has a clear software, platform, and ecosystem advantage, there is no doubt that there are plenty of customers who would love to go back to iOS if they could get a larger phone. Not only would Apple get the benefit of the current loyal Apple customers upgrading to the latest-and-greatest sooner rather than later, but a slightly pulled in iPhone 6 launch would keep those customers -- the ones who would love to go Apple but can't live without a larger device -- from going with an Android device (or -- gasp! -- a Windows Phone) this round.

Will there be some Android users who prefer Android? Of course. Will there be those who absolutely need an OLED display, crazy high pixels per inch, or a 20-megapixel camera? Of course. However, the launch of the 4.7-inch iPhone should grab a pretty solid chunk of Android users, and maybe Apple will try to go after the "spec-crazy" crowd with an even more expensive 5.5-inch variant.

Apple doesn't need all of the high-end smartphone business, but it will benefit immensely from keeping as much of it out the hands of its competitors as possible. A larger-screen iPhone will probably do that, and the sooner it can, the better.

Foolish bottom line
There is no smartphone vendor with the brand cachet and the software ecosystem "stickiness" that Apple has. As the company rolls out products that appeal to an even broader swath of the high end market, it should capture more share and ultimately continue growing profits at a respectable rate. Pulling in the iPhone 6 for an August launch, as suggested by some reports, would probably be a smart move, even if in the long-run being a month early isn't a make-or-break proposition.

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Read/Post Comments (3) | Recommend This Article (2)

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  • Report this Comment On May 10, 2014, at 8:28 PM, zippero wrote:

    Another good article, Ashraf. Many have waited for a larger iPhone for a long time, but the iPhone 5S and 5C have killed the Galaxy S4 and now S5 anyway. It took 26 days after launch for the Galaxy S4 to reach 10 million in sales, but after 30 days Samsung hasn't announced a similar stat for the Galaxy S5, which is the major reason why Samsung just fired its Galaxy phone design chief a few days ago. A larger iPhone is just the final nail in the coffin for Samsung, and you can be sure its quality will be awesome, unlike the Galaxy S5 rush-job with its camera, fingerprint sensor, Band-Aid case, and multiple other defects and outright mistakes. Samsung used to sell 100 million Galaxy S and Note devices a year, which is what put a dent in Apple's otherwise stellar revenue growth, but now Samsung is fading and the $60 bil. in revenues from those 100 mil. Galaxy sales move back into Apple's column, pushing Apple's yearly revenues well above $200 bil. Based on that alone, Apple is worth much more than $1,000 a share, while its current valuation as I've calculated it without any larger iPhone is about $830.

  • Report this Comment On May 10, 2014, at 10:39 PM, TMFAeassa wrote:

    Thanks for your ccomment, zippero!

  • Report this Comment On May 20, 2014, at 4:16 PM, bills8091 wrote:

    I wouldn't mind to get one early. I often steal my girlfriends old iPhone to play on it. It really makes time go by.

    Bill |

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Ashraf Eassa

Ashraf Eassa is a technology specialist with The Motley Fool. He writes mostly about technology stocks, but is especially interested in anything related to chips -- the semiconductor kind, that is. Follow him on Twitter:

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