In September 2014, Apple (AAPL 0.53%) broke with tradition and released its latest iPhone, the iPhone 6, in two screen sizes. The baseline model, called simply iPhone 6, sported a 4.7-inch display. Its larger counterpart, known as iPhone 6 Plus, incorporated a much larger 5.5-inch display.

Although these two devices were differentiated primarily by screen size, that wasn't where the differences between them ended. The iPhone 6 Plus, for example, had a sharper screen than the one found on the iPhone 6. The iPhone 6 Plus also had a rear-facing camera that supported a feature known as optical image stabilization, while its smaller sibling didn't. 

A woman holding an iPhone XR in the rain.

Image source: Apple.

Over the years, Apple would continue to differentiate its Plus line of smartphones in certain ways relative to their smaller counterparts. In fact, the level of differentiation seemed to grow when Apple introduced its iPhone 7 series devices, since the iPhone 7 Plus had a dual rear-facing camera system while the iPhone 7 had a single rear-facing camera. With this year's latest flagship smartphones -- iPhone XS and its larger counterpart, iPhone XS Max -- Apple has broken with that tradition. Indeed, the two devices, for all intents and purposes, are just different-sized versions of the same device.

Here's why this is a mistake.

Apple should encourage upsell

The benefit to Apple endowing the larger and more expensive versions of its devices with additional features is that such a practice could encourage users who simply want the best iPhone available to go with the larger variant. Additionally, individuals who might be torn between the two sizes might view the extra features in the larger model as a swing factor to push them toward the bigger models. 

It's a good strategy and it's one that Apple's competition also seems to be employing. For example, Huawei -- which IDC reports actually overtook Apple in terms of smartphone unit shipments in the second quarter of 2018 -- applied this strategy to its P20 series of smartphones. The higher-end P20 Pro not only has a bigger display than its cheaper counterpart, but it's differentiated in the following additional ways (see AnandTech for the full specs of each device): 

  • A noticeably superior rear-facing camera system
  • An organic light-emitting diode (OLED) screen instead of a liquid crystal display (LCD)
  • More system RAM (6GB of LPDDR4X in the P20 Pro; 4GB of LPDDR4X in the P20)

Huawei isn't the only major competitor to Apple that's doing that, either. Per XDA Developers, Samsung is planning three versions of its upcoming Galaxy S10. The largest variant of the bunch is said to have a five-camera setup -- two front-facing cameras and three rear-facing cameras. The middle variant of the S10 will reportedly have two rear-facing cameras and the cheapest model will have just a single rear-facing camera as well as a "side-mounted fingerprint scanner" (the higher-end models are rumored to have in-display fingerprint scanners).

The point here is that Apple's competition seems to be adding real value to their larger-screen devices beyond simply the larger screen to encourage upsell. Apple, on the other hand, took a step back on this front with this year's iPhone XS and iPhone XS Max devices.

Investor takeaway

It's not clear why Apple didn't more aggressively differentiate the iPhone XS Max from the iPhone XS this time around. Perhaps it didn't have a compelling piece of differentiating technology ready in time to include in the iPhone XS Max this year. Or maybe what we're seeing represents a shift in Apple's long-term strategy.

At any rate, we'll probably have a better feel for what Apple's longer-term goals are with respect to its different-sized flagships when the company releases its 2019 lineup.