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1 iPhone Strategy that Apple Inc. Needs to Change

By Ashraf Eassa - Jan 6, 2016 at 2:00PM

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One well-known Apple columnist believes that the iPhone 7 Plus should simply be a larger -- not "better" -- version of the iPhone 7. This Fool respectfully disagrees.

A rumor claiming that Apple (NASDAQ: AAPL) will release a 256 gigabyte version of the iPhone 7 Plus -- and only the iPhone 7 Plus -- recently hit Well-known Apple Insider columnist, Daniel Dilger, argues that Apple has traditionally positioned the smaller and larger iPhones as two "equal" devices, rather than viewing the "Plus" as the "superior" model.

Although Dilger is correct that this has been Apple's strategy with the iPhone 6/6s generations of iPhones, I think that Apple would actually benefit from changing this strategy up beginning with the iPhone 7. Here's why.

Unleashing the potential of the Plus
Even though Apple sells relatively high priced, premium devices, the scope of improvements that the company can make each year is limited by the fact that the prices of its devices don't really change.

With the iPhone "Plus" line, devices with comparable storage to the standard iPhones come priced at a whopping $100 higher. This higher selling price creates significant additional bill of materials headroom. Additionally, by virtue of its larger size, the "Plus" models can support more, larger, and/or more powerful components.

Today, the larger iPhones include higher resolution displays, optical image stabilization, and larger batteries as the key points of differentiation relative to the smaller device. The larger phones also include some software tweaks to allow for additional "perks" while the devices are in landscape mode compared to the smaller phones.

I believe that Apple can -- and should -- be far more aggressive in making the larger iPhones into their own phones rather than simply "larger" versions of the mainstream iPhone. This, in my view, would ultimately make for a better, more competitive large-screen phone.

What should Apple do with the larger screen phones?
I fully expect Apple to continue to differentiate the larger screen iPhones in the same ways that Apple has done with the iPhone 6/6s generations of phones (battery size, camera features, and higher resolution displays), but believe that the gap will increase with the iPhone 7.

For example, there are already reports that the iPhone 7 Plus will feature three gigabytes of main memory, while the standard iPhone 7 will come with two. This is an example of Apple using both increased cost structure headroom (more memory costs more) as well as the greater power headroom (more memory consumes more power) to deliver a fundamentally better device.

Other areas where I would like to see Apple enhance the larger iPhone relative to the smaller iPhone are in chip performance. The larger iPhone has to drive a much higher resolution display than the smaller one, so it would probably make sense for Apple to include a faster/more powerful graphics processor on the chip that powers the larger iPhone.

I don't think Apple will invest in creating two different chips for each of the iPhones (although I would be pleasantly surprised to see that), but I could see Apple running the CPU and graphics portions of the chips that it put into the larger phones at higher frequencies to deliver more performance.

Finally, I don't think that Apple was particularly well-served with the iPhone 6/6s generations of phones by making the larger phone look like a larger, "scaled up" version of the smaller one. The company might be better off giving its designers more freedom to put together ideal industrial designs for each size, even if it means making them look a little different from each other.

By making sure the two phones looked like scaled versions of each other in the 6/6s Plus generation, Apple seemed to make the bezels on the iPhone 6 Plus/6s Plus needlessly large compared to those found on competing 5.5-inch class devices. A common complaint in a number of reviews with Trusted Reviews saying that the iPhone 6s Plus is "still too big " and Tech Radar calling it "big and heavy ."

We'll know what's up Apple's sleeve in a few months, most likely
Once the next generation iPhones go into production, I don't think it'll be too long before significant details of the next generation iPhones start leaking to the Web. It'll be very interesting to see what design decisions Apple ultimately made with the next generation iPhone 7 and 7 Plus and to what extent the Plus model is differentiated from the standard one.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.

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