Apple (NASDAQ:AAPL) finally "went big" this year with its iPhone lineup, and it's not at all clear if the company will ever go back. Fellow Fool Evan Niu presented both sides of the argument, noting that the capital requirements required to support simultaneous iPhone models, coupled with the potential for product portfolio "bloat," would be good reasons for Apple to not simultaneously launch three iPhone models each year.
On the flip side, though, Evan pointed out that Apple could have "a stronger lineup within each discrete market segment," allowing it to "exert its typical pricing power and extract a premium for its efforts."
While there are merits to both sides, I'm going to throw my hat into the ring and argue that Apple should, indeed, continue to keep its 4-inch iPhone offerings fresh.
There is probably a substantial market for 4-inch iPhones
Even in a world of 4.5-inch and up smartphones, Apple's iPhone 5s still managed to do extremely well last year with just a 4-inch display. While some might argue that iPhone 5s's robust feature set and build quality helped it to succeed despite a smaller screen, I still think there's a pretty sizable market out there for modern, smaller iPhones.
Now, I'll admit that many users are no doubt thrilled with the larger 4.7-inch and 5.5-inch screens available on the iPhone 6 and 6 Plus, respectively, and many iPhone 6 buyers probably wouldn't want to go back. By all means, Apple should focus most of its energies and put its most advanced features into future larger models.
However, I think Apple would be leaving money on the table by ignoring buyers who simply want a premium, smaller iPhone. And, frankly, it wouldn't take much to keep those buyers happy.
Use the iPad Mini playbook
When Apple refreshed its iPad lineup this year, it launched both an iPad Air 2 and an iPad Mini 3. The iPad Air 2 came packed with plenty of new features, including a much faster chip, a slimmer industrial design, and an anti-reflective screen coating.The iPad Mini 3, on the other hand, was just an iPad Mini 2 that also came in gold and featured Touch ID.
It's clear that, in this case, Apple wants to sell the iPad Air 2, but if a customer really needs to have a smaller iPad, then that customer has the choice to buy it in the form of a Mini. It didn't take much incremental effort for Apple to make this product available, and selling iPad Mini 3 models sure beats letting that sale go to a competitor.
Apple could run the exact playbook with a potential iPhone Mini. Keep the industrial designs of the iPhone Mini models around for longer than the ones on the mainstream iPhones, and update the internals less frequently. Include critical ecosystem enablers such as Apple Pay, Touch ID -- anything that keeps these users hooked on the Apple ecosystem -- but make potential customers always have to think really hard about whether they should just buy one of the larger models instead.