A few new rumors for Apple's (NASDAQ:AAPL) next lineup of iPhones surfaced this week. They aren't the first bits of iPhone 6 gossip to hit the Interwebs, but the increased frequency of the chatter signals the rumor mill for Apple's next big smartphone launch is now in session. Here's a roundup of early rumors:
Bloomberg suggested in November that Apple's next-generation iPhones could have larger displays, taking cues from Samsung's larger Galaxy lineup. If Bloomberg's speculation is correct, Apple will launch two new iPhones later in 2014, both with larger displays, measuring 4.7 and 5.5 inches. Making matters more interesting, Bloomberg's unidentified source says the glass will curve downward at the edges.
On Thursday, The China Post (via MacRumors) cited an analyst from Nomura Securities who asserted the iPhone 6 will continue to use an 8-megapixel sensor. Despite several minor upgrades the camera will likely receive, he believed it will not gain a higher-resolution sensor.
Also on Thursday, rumors made the rounds that Apple will be increasing its reliance on Pegatron for the next-generation iPhone production. Taiwan's Liberty Times said Pegatron might land a contract to assemble half of the iPhone 6 supplies.
This would be a substantial upgrade for the manufacturer. Pegatron is currently responsible for the assembly of Apple's iPad mini and iPhone 5c, while Foxconn assembles the iPhone 5s.
Even more, the move would make strategic sense for Apple by minimizing supply-chain risk. Investors have had concerns with Apple's heavy reliance on Foxconn. Explosions at the plant, for instance, have worried Apple analysts. With so much reliance on one plant, catastrophes could have major impacts on Apple's ability to meet the demand for its new product launches.
The Pegatron rumor prompted further speculation of whether or not Apple will once again be introducing a bifurcated product lineup as it did with the iPhone 5s and 5c. Liberty Times didn't break down exactly what part of the assembly of the new lineup will go to Pegatron.
Sifting through the noise
Are any of these rumors meaningful to investors? After all, Apple CEO Tim Cook warned analysts against reading into supply-chain rumors during Apple's fiscal 2013 first-quarter earnings call:
Months of rumors about order cuts and so forth, so let me take a moment to comment on these. No comment on any particular rumor.
I suggest its good to question the accuracy of any kind of rumor about build plans. Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant to our business. The supply chain is very complex and we have multiple sources for things. Yields can vary, supplier performance can vary. There is an inordinate long list of things that can make any single data point not a great proxy for what is going on.
While investors would be wise to heed Cook's advice for the majority of rumors, it is useful for investors to check in on Apple's speculated product plans occasionally -- particularly when the plans have to do with the iPhone. Accounting for more than 50% of Apple's revenue, and even a larger portion of the company's operating profits, Apple's moves in the smartphone arena have huge impacts on the business.
In this case, the substance of these rumors isn't enough to alter an investment thesis -- especially speculative rumors so early in the manufacturing stages. Although Bloomberg's reported drastic changes to the iPhone are intriguing, Apple is known to change features at the last minute.
Furthermore, the rumored move to diversify supply-chain dependency would be great, but the rumor doesn't suggest a contract is complete.
What do you think about these rumors? Would a move to larger iPhones to broaden the scope of Apple's smartphone offerings be smart? Is Apple's concentrated reliance on Foxconn dangerous?