Don't Sweat the Rumored 5.5-Inch iPhone 6 Delay

For months, speculation has swirled around Apple's (NASDAQ: AAPL  ) iPhone 6 launch plans. Many analysts have expected Apple to launch its first "phablet" this year, in the form of a 5.5-inch iPhone. However, Ming-Chi Kuo, a well-connected analyst from KGI Securities, predicted last week that Apple will delay the launch of the 5.5-inch iPhone 6 until 2015.

The simultaneous introduction of two big-screen iPhones would certainly make for a nice one-two punch this fall. However, even if this rumor is true, it's no big deal for Apple. The exact timing of the 5.5-inch iPhone launch won't make much difference in Apple's long-term fight with Samsung (NASDAQOTH: SSNLF  ) . What really matters is whether it's a great product.

The iPhone 5, 5s, and 5c all have 4-inch screens, but many people want bigger screens. (Photo: Apple.)

Are there two new iPhones coming?
Most Apple-watchers believe the company plans to launch not one but two new iPhone form factors this fall. The iPhone 5s maintained the 4-inch display of the iPhone 5, but rumors have been swirling since at least November that the iPhone 6 will come with two screen size options: a 4.7-inch base model and a 5.5-inch phablet.

If the new iPhones come in 4.7-inch and 5.5-inch versions, they would straddle the size of Samsung's flagship Galaxy S5. The 5.5-inch version would also be close in size to Samsung's Galaxy Note. Apple's apparent plans to go big-screen with the iPhone 6 are the clearest evidence yet that Apple is determined to give Samsung a taste of its own medicine.

Samsung has gained market share in the past five years by offering a variety of sizes and price points to suit different customers' preferences. Within a few months, Apple could have its own stable of 4-5 iPhones across a range of sizes and price points.

The rumor mill keeps churning
While there seems to be a consensus that Apple will launch 2 new big-screen iPhones, the timing has been much more disputed. Last month, Bloomberg reported that Apple was about to begin mass production of the 4.7-inch iPhone 6 for a launch in September and that the 5.5-inch model might be ready at the same time.

Analyst Ming-Chi Kuo, who has come up with some big Apple-related scoops in the past, disagrees with this timeline. He believes that production issues will delay the 5.5-inch iPhone until late November at the earliest and possibly push back its launch into 2015.

"Phablets" like the Galaxy Note 3 have become increasingly popular. (Photo: Samsung.)

Does it matter?
Apple bulls have been looking forward to an "iPhablet" for a couple of years now, believing that Apple has given away market share by not having a big-screen phone offering. This is particularly true in China -- a key growth market for Apple -- where screen sizes greater than 5 inches have become very popular.

That said, Apple is already very late to the party when it comes to phablets. (Consider that Samsung is expected to release the Galaxy Note 4 this fall!) For the most part, people who have been desperate for a phablet-sized phone have bought one by now.

In this context, there's no particular reason to believe that a three- to four-month delay will have a material impact on long-term sales. To be successful, a 5.5-inch iPhone will need to poach customers from Samsung, with former iPhone users being the most obvious targets. Product quality will be far more important than launch timing in this regard.

Additionally, it could make strategic sense to delay the 5.5-inch iPhone to 2015. After all, the 4.7-inch iPhone 6 is virtually certain to drive a strong upgrade cycle by itself. Adding a simultaneous 5.5-inch iPhone launch could strain production capacity.

By contrast, an early 2015 launch would allow Apple to ramp up production of the 5.5-inch iPhone as production of the 4.7-inch iPhone 6 declines from the holiday season peak. Samsung has followed this staggered launch strategy with its top two phone lines. New Galaxy S models have launched in the spring, while new Galaxy Note models have arrived in the fall.

Foolish final thoughts
If Apple is able to launch both the 4.7- and 5.5-inch iPhone 6 models this fall and produce enough of each to meet demand, it will be on track for a blowout December quarter. However, it's quite possible that Apple won't be capable to launch volume production of both models in time.

That's no reason for concern, though. A delayed rollout of the 5.5" iPhone may lead to more modest growth in the December quarter, but better sales and earnings growth through the rest of Apple's FY15. For its first phablet, Apple needs to focus on getting it right, not on getting it soon.

Leaked: Apple's next smart device (warning -- it may shock you)
The iPhone 6 isn't the only big Apple product launch coming. Apple recently recruited a secret-development "dream team" to guarantee that its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are even claiming that its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts that 485 million of these devices will be sold per year. But one small company makes this gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and to see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3034637, ~/Articles/ArticleHandler.aspx, 12/20/2014 4:05:02 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement