Although Apple (NASDAQ:AAPL) has worked hard to diversify its revenue by introducing new hardware products as well as new services, the simple truth is that the company's financial performance is still heavily dependent on the performance of its most important product category -- the iPhone.
To that end, Apple strives to introduce new iPhone models each year with improved features and capabilities to try to get owners of older models to upgrade, and to sway users of other smartphone brands to switch.
Here are three improvements that I think Apple is likely to bring to the successor to Apple's current flagship smartphone, the iPhone X, later this year.
1. Faster cellular capability
With each new iPhone generation, Apple improves cellular connectivity performance and capability with upgraded cellular modems. New cellular modems generally include improvements in peak data transfer rates, and often enjoy efficiency improvements through better design and, sometimes, more-efficient chip manufacturing.
According to KGI Securities analyst Ming-Chi Kuo, Apple's upcoming iPhone models will, indeed, see significant improvements in cellular capabilities. Apple is expected to migrate to Intel's (NASDAQ:INTC) XMM 7560 LTE modem in all the new iPhone models, which should mean that peak download speeds in the new devices will increase to 1 gigabit (1,000 megabits) per second, up from a peak capability of 600 megabits per second in the best currently available iPhone models.
The new modem is also expected to be manufactured with Intel's 14-nanometer technology, which should enable a dramatic efficiency improvement compared to prior Intel modems, which are built with a much less advanced 28-nanometer technology. (Intel modems power a portion of Apple's iPhone 7 series, iPhone 8 series, and iPhone X smartphones.)
2. A much-improved camera
One area that should get a significant amount of attention in the iPhone X successor is the camera subsystem. Although the iPhone X brought some significant improvements in camera quality compared to the prior generation iPhone 7/7 Plus, the magnitude of the improvements is likely to be larger in this year's models.
In particular, I expect that the new iPhone models will employ a lens with a wider maximum aperture than the ones now on iPhones, which should dramatically improve image quality, particularly in low light. (Apple did not widen the aperture of the main rear-facing camera lens when it migrated from the iPhone 7 series to the iPhone 8 series/iPhone X.)
Additionally, while Apple introduced support for 4K 60-frames-per-second video capture in the iPhone 8 series and the iPhone X, it did not include the capability to capture video in high dynamic range, or HDR (just think of this as dramatically improving the quality of the video captured). I think Apple will introduce this in the successor to the iPhone X because it'll be an easily marketed feature that'll bring a real improvement to video capture.
In support of the camera improvements, I expect Apple to include a heavily upgraded image signal processor in the upcoming A12 processor as well as redesigned camera sensors.
All told, I think the features that Apple will market most heavily in the upcoming iPhone X will be the camera improvements.
3. A bigger option
Today, the iPhone X comes in a single display size: 5.85 inches, measured along the diagonal. Although this is plenty big for many users, a large portion of smartphone buyers would likely be thrilled at the prospect of an even larger iPhone X.
Fortunately, multiple highly credible reports claim that Apple won't offer the successor to the iPhone X in just a single size -- it'll apparently be offered in two. The first is expected to be a direct successor to the current iPhone X with the same display size. The second is expected to be a larger version with a display measuring 6.46 inches along the diagonal.
The dramatically increased screen size should appeal to many potential customers, with current iPhone Plus users and users of jumbo-sized Android smartphones being the obvious targets. Moreover, if Apple includes features that are unique to the 6.46-inch iPhone X, then even current iPhone X owners who may not have preferred a larger display may buy one simply to have the best iPhone available.