Early rumors about Apple's (NASDAQ:AAPL) 2018 iPhone lineup claimed that the company would launch three new iPhones, each with the same organic light-emitting diode (OLED) display technology found on this year's iPhone X.

One report claimed that the three models would have display sizes of 5.28 inches, 5.85 inches, and 6.46 inches. However, a fresh report from The Korea Herald asserts that Apple canceled the development of the next-generation iPhone with a 5.28-inch OLED panel "possibly due to the low marketability of the smaller version."

Apple's iPhone 8 and iPhone 8 Plus.

Image source: Apple.

That same report also says that after Apple scrapped plans for the 5.28-inch OLED model, it added a 6-inch liquid crystal display (LCD) model to next year's lineup.

Let's take a closer look at why Apple would do that and how it could position such a phone.

A possible explanation

The displays found on this year's iPhone X are believed to be manufactured exclusively by archrival Samsung (NASDAQOTH: SSNLF). Since Apple can't yet multisource OLED displays that meet its rigorous standards -- Samsung is said to be the only company that can build such displays for Apple right now -- Apple essentially must pay Samsung whatever it wants for the panels.

That's a situation that leads to higher component costs for Apple and therefore higher prices for consumers.

Apple's iPhone X.

Image source: Apple.

Apple is said to be trying to bring other display manufacturers into the fold to break free of Samsung's grip, but it's not clear when those other players will be able to manufacture OLED panels that meet Apple's high standards and increasingly sophisticated display technology needs.

This year, Apple got around this situation by launching the OLED-powered iPhones at higher price points while offering iPhones with traditional LCDs at typical iPhone price points.

Apple might want to do the same thing next year with this rumored 6-inch LCD-based iPhone.

How it could work

I could see Apple launching a successor to this year's iPhone X with a 5.85-inch display at the same price that it charges for the current iPhone X, or perhaps at a slight discount. Then, at a higher price point, Apple could introduce an even more advanced iPhone X-like product with the rumored 6.46-inch display.

For more price-sensitive customers, Apple could introduce this rumored iPhone with a 6-inch LCD. Such a product could come in at a starting price of, say, $749 (the average of the pricing of the entry-level iPhone 8 and the iPhone 8 Plus) and come with the key internal upgrades found inside of the new OLED iPhone models.

One of the prominent criticisms of the current iPhone 8 and the larger iPhone 8 Plus is that the phones have large bezels on the sides as well as on the top and bottom, giving them relatively low screen-to-body ratios and hurting their competitiveness in the market.

Apple's iPhone 8 running a video game.

Image source: Apple.

With a 6-inch LCD iPhone, Apple could build a phone with a screen-to-body ratio close to what it can with the OLED models by eliminating the home button and using an alternative form of biometric authentication such as the TrueDepth camera system found in today's iPhone X.

To differentiate the OLED iPhones from the LCD iPhone, Apple could use the same TrueDepth camera used in today's iPhone X in the LCD model and then implement a second-generation TrueDepth camera system (perhaps one that's faster and/or more accurate than today's version) in the next-generation OLED models.

Moreover, I don't think a next-generation iPhone with a 6-inch LCD would use a display that retains the same 16:9 aspect ratio of the current iPhones; I could see Apple moving to a display with the same aspect ratio as the one on the current iPhone X (roughly 39:18).

The combination of the new aspect ratio, the elimination of Touch ID in favor of Face ID, and the use of an LCD rather than an OLED would allow Apple to deliver a reasonably cost-effective and compelling next-generation iPhone in addition to the two expected OLED models.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.