Anticipation for Apple's (NASDAQ:AAPL) latest iPhone is continually growing, especially as we approach the company's worldwide developer conference next week. While it's unlikely the company will debut any new iPhones at WWDC, a new report released by IDC shows that phablet smartphones are growing so fast they're changing the tablet market landscape -- just as Apple is reportedly readying two new larger iPhones.
Right size, right time
Apple already knows it needs a larger iPhone, the company said as much in recently released Samsung trial documents. In a few slides, Apple noted that consumers were moving toward smartphones that have displays larger than four inches (the size of the current 5s display), and even labeled one of the slides "consumers want what we don't have." If rumors prove true, Apple will launch a new 4.7-inch iPhone this fall, and the possibility of 5.5-inch iPhone as well, to meet the growing demand of larger displays.
And the latest data from IDC shows that Apple could be releasing these at just the right time. The research firm said this week that it's significantly lowering its tablet outlook for this year, in part because of the "rise of phablets."
Here's what IDC said in the release:
In the past year alone, the phablet share of smartphone shipments has more than doubled, from 4.3% in the first quarter of 2013 to 10.5% in the first quarter of this year, representing 30.1 million units shipped.
While phablets were thought to be a smartphone fad for a while, they're now changing, in part, how consumers buy tablets -- and it appears they're not going away any time soon.
Apple still needs to get it right
Of course, Apple could ignore its own data and the IDC data and stick with a 4-inch iPhone 6, but that's seeming less and less likely. Yet another report came out this week, this time by AppleInsider, that said the Apple is working on both a 4.7-inch and 5.5-inch model that will be manufactured primarily by Foxconn.
Judging by the IDC data, it's clear that Apple could significantly benefit from selling the larger 5.5-inch device, but it would be a huge step away from its current iPhone lineup. Because of that, it would make sense the company would keep around the 5s, 5c or some iteration of the 4-inch screen to keep its screen sizes and price points diversified.
Foolish final thoughts
Apple certainly won't be breaking new industry ground by releasing larger iPhones -- Samsung and other competitors get the credit for spawning the phablet market – but in typical Apple fashion the company will be showing up later to the game, but hopefully with a much better product.
I think it would be best for Apple to release two new, bigger iPhones at the same time, rather than stagger their launches. But if two new phones are in the works it's possible one could be delayed because of manufacturing constraints and not because Apple wants separate launch dates. Either way, Apple has held out long enough from entering the phablet market, but it could be entering it at a time when shipments are growing at breakneck speeds, and no one can fault the company for that.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
These Display Makers Are Competing for Apple Inc.'s OLED Orders
This is a positive development for Apple.
Lots of Potential Uses for Apple's Cash Haul
Recent changes to the U.S. tax code will result in Apple bringing a boatload of cash back from abroad. What will the company likely do with it?
Apple Earnings: Looking for More Growth
Mark your calendar: Apple earnings are just a few weeks away. Here's what investors should know.