When Apple (AAPL +0.15%) introduced its latest iPhone lineup in the fall of 2018, it consisted of three models: the iPhone XR, iPhone XS, and iPhone XS Max. The iPhone XR is the lowest-end model of the bunch, while the iPhone XS and iPhone XS Max represent the company's more premium offerings.
What's interesting, though, is that while these devices are ordered based on price, they're not ordered with respect to screen size. The iPhone XS, which starts at $999, actually has the smallest screen of the group, measuring 5.8 inches along the diagonal. The iPhone XR, the cheapest of the trio, has a 6.1-inch screen, but that screen is based on a technology known as a liquid crystal display (LCD) that's less advanced than the organic light emitting diode (OLED) screens found on the iPhone XS and iPhone XS Max.
Although I can understand why Apple segmented its lineup the way that it did, Samsung's (NASDAQOTH: SSNLF) latest launch, of the Galaxy S10 family, illustrates a better organized product segmentation strategy than Apple's.
Image source: Apple.
A sensible progression
Samsung's Galaxy S10 series of smartphones has three main family members. At the lowest end is the Galaxy S10e, which has a 5.8-inch OLED screen and a dual rear-facing camera. The middle model, known simply as the Galaxy S10, has a 6.1-inch OLED screen and a triple rear-facing camera. And, finally, the Galaxy S10+ has a 6.3-inch screen, a triple rear-facing camera, and a dual front-facing camera.
There's also a fourth member of the family, the Galaxy S10 5G, which includes 5G connectivity and a depth-sensing camera on the back as well as an even larger 6.7-inch screen. However, that device is expected to launch later than the main three.
So, what Samsung is doing here is not only better segmenting its main Galaxy S10 devices than Apple did its current lineup -- the bigger the screens, the more featured the device -- but it's also offering its most enthusiastic customers (or ones who simply have the money to burn for a status symbol) an even bigger, more capable product option.
Apple unlikely to change the lineup in 2019
According to respected analyst Ming-Chi Kuo with TF International Securities, Apple's 2019 iPhone lineup will continue to consist of three iPhones: 5.8-inch and 6.5-inch OLED models, and a lower-end 6.1-inch LCD model. At this point, I'd imagine it's unlikely that Apple will dramatically change these plans, especially considering that Apple generally reuses the same basic smartphone form factors for at least two generations before migrating to a new design. (Apple's iPhone XR and iPhone XS Max designs are only a year old, although the iPhone XS's design is now two years old.)
There has been at least one report claiming that Apple intends to ditch LCD technology for the 2020 iPhone lineup altogether, something that would likely pave the way for an iPhone stack that looks more like what Samsung is offering with its Galaxy S10 product family. (I believe that Apple's product segmentation choices for the current and upcoming iPhone lineups were driven primarily by the desire to use an LCD screen in the lowest-cost iPhone model, for cost-structure reasons.)
Check out the latest Apple earnings call transcript.
It looks as though Samsung has a well-designed lineup of flagship smartphones to carry it through the next year or so. For the sake of Apple and its shareholders, I hope that Apple takes a page from Samsung's playbook and adjusts to follow Samsung's lead.
