Apple's iPhone 5s (right) may not be Apple's last 4-inch phone. Source: Flickr user Karlis Dambrans
Another day, another rumor about Apple's (AAPL +3.26%) next-gen iPhone 6s. If you've been following the rumor mill, the cacophony has reached frenzied pace in regards to Apple's most-important product. First, the media reported Apple would use a carrier-agnostic SIM card in the iPhone 6s. Next, the rumor mill heated up with reports of increased RAM storage. In addition, The Wall Street Journal reported Apple would bring its Force Touch technology to the iPhone 6s.
Personally, I find these rumors credible. Considering both Force Touch technology and the carrier-agnostic SIM card are now in current generations of other Apple products -- the MacBook and Apple Watch have Force Touch technology and the iPad has a carrier-agnostic SIM card in its cellular models -- and Apple's RAM is due for a refresh, these rumors seem plausible.
Coincidentally, I find the newest rumor (courtesy of Apple Insider) about Apple's iPhone 6s believable as well -- the company will offer three versions, and keep the 4-inch screen as an option. Apple's big rumor is it will stay small.
Screen (and price) creep?
More recently, the smartphone arms race has gone in one decided direction -- bigger. As far as luxury lines go, Samsung started the trend by going from a 4-inch screen in its first Galaxy S phone to 4.8 inches in its Galaxy S3 version two years later (its next-gen Galaxy S6 is 5.1-inches). Last year, Google supersized its Nexus line with the Nexus 6, taking the screen size from nearly five inches to nearly 6 inches. And, of course, Apple joined the trend with its wildly popular iPhone 6 and iPhone 6 Plus iterations.
In the event Apple did not offer a 4-inch version in its next-gen offerings, and Apple's 5s and 5c versions are cycled out, consumers would lack a smaller-size option. And there are trade-offs for larger screens. Google's Nexus 6 price jumped from $349 off-contract to $649 in order to offset the higher bill of goods associated with a bigger screen; Apple is charging an extra $100 for the iPhone 6 Plus to accommodate the bigger screen.
A possible iPhone 6c?
There's a contingent that likes Apple's ecosystem and interface but doesn't have to have the newest A9 processor and a 4.7-inch screen -- just a portable, cost-efficient phone that works well. For those consumers, Apple could follow the iPhone 5c playbook and offer a cheaper model with older specs.
For Apple's iPhone 5c, the company basically offered the previous-gen iPhone 5 processor with a cheaper BOM (bill of materials) due to a plastic case. Considering the display accounts for nearly 20% of Apple's iPhone bill of materials, the company could introduce a new low-tier iPhone 6c with an older processor, plastic casing, and a smaller screen to draw users into its ecosystem at a lower price point.
This could help Apple both internationally and domestically
A cheaper iPhone could potentially help Apple in cost-sensitive developing markets. Much has been made of Asia's -- especially China's -- love of larger-screen phablets. But the iPhone 6 starts at $649 off-contract in the U.S. (and higher in China and most other foreign countries), which may be a barrier to mass adoption in a country that has a GDP per capita of $6,800. A cheaper version could bring more users into Apple's sticky ecosystem.
Finally, a lower-cost phone could help Apple's upgrade cycle in the U.S., where many carriers are looking to wean users off of device subsidies. A cheaper phone could quicken the upgrade cycle once users are faced with the full cost of the device. In the end, it appears Apple offering a 4-inch phone next iteration is a low-risk move to increase choice -- I'm filing this rumor in the "It's Possible" category.
