Following the disappointing performance of Apple's (NASDAQ:AAPL) iPhone 6s-series smartphones in the marketplace, it's imperative that the iDevice maker's upcoming iPhone proves to be an extremely compelling product.
One area in which I expect the next iPhone, which I'll refer to as iPhone 7, to be substantially improved relative to its predecessor is the display. Apple has historically done major display upgrades in its iPhone lineup every two product generations, so it's about time for an iPhone display upgrade.
Earlier this year, I outlined three major display upgrades that I expect to see in iPhone 7: a "true tone" display that varies color temperature based on ambient lighting, a panel with support for a greater color saturation (that is, a wider color gamut), and an anti-reflective coating.
Although the next iPhone could feature the first two items, there's some evidence to suggest that the third isn't likely to happen this year.
Check out this leaked image
Several photos purportedly of the next-generation iPhone have hit the web over the past month or so. Here's one that's supposed to be of the next-generation iPhone 7 Plus:
Notice that the front of the device is heavily reflecting its surroundings. If the device shown in the image represents what the final version of the iPhone 7 Plus will be, then I think that we can forget about having Apple bring the anti-reflective coating that it uses on its iPad Pro lineup to the iPhone this year.
Why leave this feature off?
An anti-reflective coating, particularly the one found on the current-generation iPad Pro, would have been a very nice addition to the next-generation iPhone. As a user of both an iPhone 6s and a 9.7-inch iPad Pro, I really appreciate the anti-reflective coating found on the iPad and wish it were on my iPhone.
Apple clearly has the technology to implement this feature -- if it can be implemented on a large 9.7-inch screen, then it can be implemented on smaller 4.7-inch and 5.5-inch screens. So why would the company potentially leave it off of the next-generation iPhone?
I believe it ultimately comes down to economics. Adding this coating probably leads to a modest increase in the bill-of-materials cost of the phone relative to leaving it off. Additionally, adding the coating might lead to decreased manufacturing yields. If the coating isn't applied properly, the front panel of the phone could need to be scrapped.
At this point, given that the company really needs to put the iPhone back on a growth path, it might be a good idea to sacrifice gross profit margin a bit by adding in features that could help drive upgrade activity and/or share gains at the high end of the smartphone.
However, I suspect that Apple is still trying to be very careful about what features it adds in, particularly if those features bring non-trivial increases in costs. Sacrificing margin for features is fine if those features drive additional sales, but if the odds aren't high that they will drive incremental sales or share gains, then that's just an unnecessary destruction of shareholder value.
The iPad Pro, on the other hand, doesn't ship in anywhere near the volumes a flagship iPhone does. Additionally, iPad sales as a whole don't make up anywhere close to the percentage of Apple's top and bottom lines that iPhone does. This gives Apple a bit more freedom to add features to the iPad relative to the iPhone.
Apple's new iPhone is expected to be announced on Sept. 7, according to Bloomberg, so it won't be long until we know whether the new iPhone has an anti-reflective coating.