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Why Apple Inc. Will Need to Launch an iPhone in March 2017

By Ashraf Eassa – May 7, 2016 at 10:30AM

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It's all about keeping the year-over-year comparisons in check.

Image credit: Apple. 

Apple (AAPL -2.12%) did something a bit unusual this year: It launched a mid-cycle iPhone product called the iPhone SE. This device was not intended to be a flagship replacement/refresh, but instead, an attempt to increase its competitiveness in the $400 to $500 price range -- an area in which the iDevice maker has not been particularly competitive over the years.

What's particularly interesting about the launch of the iPhone SE in March 2016 is that it almost certainly guarantees that the iDevice maker will be forced to launch some sort of new iPhone in March of 2017. Here's why.

It's all about the year-over-year comparisons
At the end of the day, one thing that investors really pay attention to is year-over-year growth. In the fiscal third quarter of this year, Apple should enjoy a nice "boost" from sales of the iPhone SE. Those sales aren't expected to fully offset the weakness that Apple will likely see from the iPhone 6s/6s Plus, but every little bit should help.

With this in mind, it's worth noting that -- barring a massive success for iPhone 7 -- Apple will face tough year-over-year comparisons in both Q3 of fiscal 2017 and Q4 of fiscal 2017 if it doesn't release a new iPhone in March of 2017. This leads me to believe that Apple will ultimately end up releasing new iPhones in March of 2017.

What could Apple launch then?
An obvious product for the iDevice maker to launch would be a second-generation iPhone SE. Such a product could incorporate faster internals, 3D Touch, a higher quality 4-inch display, and an improved camera. Apple could even try to build on the industrial design, potentially making it thinner, or increasing the screen-to-body ratio by opting for a slightly larger display, and narrowing the bezels on the device.

Such a device would immediately solve the year-over-year comparison "problem" that the iPhone SE introduced.

One more thing...
As many have pointed out, June 29, 2017 marks the 10-year anniversary of the launch of the first iPhone. There has been some speculation that Apple could launch a new iPhone on June 29, 2017 (a Thursday) as a sort of "10-year anniversary" edition, so to speak.

Given the rumors that the iPhone 7 and 7 Plus don't include radical changes from the iPhone 6s/6s Plus (at least in terms of form factor), it could make sense for the iDevice maker to "pull in" the launch of its next-generation products. Doing so would allow Apple to deploy a "game changing" new iPhone sooner -- i.e. with curved OLED display, big industrial design change -- to limit iPhone 7's time in the marketplace. Then, from that point on, Apple could return to a one-year iPhone release cadence (but starting in June).

This would mess with the year-over-year comparisons that Apple would see in individual quarters -- fiscal Q4 would become the peak quarter rather than fiscal Q1 -- but investors/analysts should be able to adjust their models to this new seasonality without much trouble.

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