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1 Thing Apple Inc. Needs to Do to Make iPhone 7 Plus a Massive Success

By Ashraf Eassa – Feb 2, 2016 at 10:30AM

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iPhone 7 Plus must be a "no compromises" premium device in order to help Apple further bolster its average selling prices.

In 2014, Apple (AAPL -3.00%) introduced not one but two flagship iPhones -- the iPhone 6 and the iPhone 6 Plus. The former's display measured a solid 4.7 inches while the latter brought a whopping 5.5-inch display. In the words of Apple marketing chief Phil Schiller, these phones were "a lot bigger."

Generally speaking, the smaller and the larger phones were pretty much "scaled" versions of each other with a few key differences. In favor of the iPhone 6 Plus was the inclusion of optical image stabilization as well as a sharper full-HD display. The iPhone 6 had a display with better color accuracy/contrast, a slimmer body, and a seemingly better screen-to-body ratio.

With rumors swirling that Apple plans to introduce not one but two variants of the iPhone 7 Plus -- one with a single aperture camera and one with a multi-aperture camera -- it's clear that Apple is doing its best to try to up-sell users to larger, more premium devices in a bid to further bolster iPhone average selling prices.

In my view, in order for Apple to really hit a home run with the next-generation Plus models, it's going to need to make sure it delivers the one thing that it didn't with either the 6/6 Plus or the 6s/6s Plus.

No compromises, please
It seems a bit odd that Apple forces iPhone buyers have to make painful trade-offs between screen resolution and color accuracy and contrast. It's also quite annoying that the larger, inherently heftier phone is also thicker than its smaller counterpart.

If Apple charged the same for both sizes of the device, then it would be understandable that some sacrifices would need to be made with the larger device simply due to cost structure/margin concerns. However, for the extra $100 that Apple charges for its Plus models over its standard models, this seems like an unacceptable trade-off. 

At any rate, I believe that if Apple is able to deliver an iPhone 7 Plus that is unequivocally better than the vanilla iPhone 7, more users should buy up the iPhone stack than they currently do, proving to be a nice tailwind for iPhone average selling prices.

Why are iPhone average selling prices so important?
It would obviously be very nice if Apple could continue growing iPhone units at a rapid clip, but the reality is that unit shipment growth has slowed significantly. In fact, Apple itself expects iPhone units to decline in the current quarter (though it seems to blame this on macroeconomic headwinds more than on structural issues).

In order for Apple to stack the odds in its favor for iPhone revenue growth, even if unit shipment growth proves challenging, the company will need to focus on shipping as rich a mix of iPhones as possible.

We've already seen rumors that Apple is planning to introduce an entirely new storage tier with a 256 gigabyte iPhone 7 Plus model. This seems like a fairly easy way to boost average selling prices. That, coupled with the reports that Apple will introduce two variants of the iPhone 7 Plus, should mean that Apple is setting itself up nicely to sell a rich mix of iPhones in the coming cycle.

I just hope that Apple avoids some of the "deficiencies" that it stuck the prior-generation Plus phones with when it releases the iPhone 7 Plus. 

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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