Apple (NASDAQ:AAPL) isn't the only company that could benefit from the next iPhone.
The Cupertino tech giant's upcoming handset, which should launch this fall, is likely to pack a number of new features, including a better camera and faster processor. It might also introduce a new port, one that could open the door to a flurry of new iPhone accessories. If so, it could provide a boon to the business of accessory-makers, including Logitech (NASDAQ:LOGI).
Is the Smart Connector coming to the next iPhone?
Although we won't know for sure until Apple unveils the phone later this year, a persistent string of rumors suggest that the Smart Connector is coming to the iPhone 7. The Smart Connector made its debut last fall with the introduction of the 12.7-inch iPad Pro. It returned earlier this year, with the launch of the iPad Pro's smaller, 9.7-inch sibling. Apple's Smart Keyboard uses the Smart Connector to interface with the iPad Pro, as it provides both power and connectivity.
In April, Japanese magazine Mac Fan included an alleged diagram of the forthcoming iPhone 7 Plus in its latest issue (via Macotakara). The diagram featured an image of the iPhone 7 Plus' rear shell, which notably sported the triple dot design characteristic of the Smart Connector. Then, late last month, another set of diagrams appeared online, this time from mydrivers, also showing the Smart Connector.
For now, these remain mere rumors, but it wouldn't be surprising if Apple gave the next iPhone a Smart Connector port. In addition to transferring data, the Smart Connector can also provide power. Logitech's Logi BASE is a charging stand designed for the iPad Pro. Like Apple's Smart Keyboard, it uses the Smart Connector to recharge the iPad's battery.
Other reports, from a wide variety of sources, have said Apple plans to remove the 3.5mm headphone jack from the next iPhone model. Users could switch to wireless, Bluetooth headphones, or they could make use of the Lightning port for audio, either with a pair of Lightning-equipped headphones or with a converter. That could present a problem, however, as it would be impossible to both charge the phone and listen with wired headphones without utilizing a cumbersome and potentially expensive dongle. A charging stand, case, or plate that made use of the Smart Connector could provide a better solution.
The Smart Connector could make it possible for accessory-makers to introduce a variety of more powerful add-ons. For years, companies have offered physical keyboard cases for the iPhone, but none have ever gone mainstream. Most of them rely on Bluetooth, which can be problematic, and use a separate battery, giving users the unfortunate liability of having yet another device they must remember to recharge. The Smart Connector could eliminate these issues as it's done for the iPad Pro.
More generally, there's a growing trend toward giving smartphone users access to better accessories. LG's G5 is notable for its commitment to modularity -- using a system of swappable lower bezels, G5 owners can imbue their handsets with a variety of different features. Motorola's next flagship handset is rumored to offer something similar. More recently, case-maker Otterbox unveiled a system composed of a modular case and various accessories designed for use with the iPhone 6 and iPhone 6s. And, later this year, Google will finally launch its long-awaited Project Ara handset, a phone distinguished through its use of swappable modules.
Logitech's business could benefit
Logitech sells many different sorts of accessories and peripherals, most notably mice and keyboards, as well as devices for video games and mobile and PC speakers.
But Logitech also has a tablet accessory business, which generated more than 8% of its revenue last quarter. Sales in the category rose 18% on an annual basis, exceeding Logitech's total revenue growth, which edged up just 4%. During Logitech's most recent earnings call, CEO Bracken Darrell attributed the growth directly to Apple, pointing to the success of its CREATE keyboard among iPad Pro buyers.
Logitech could enjoy a similar boost if the Smart Connector comes to the iPhone 7. For now, investors should take a wait and see approach, but if Apple unveils a Smart Connector-equipped iPhone come September, investors may wish to add some Logitech shares to their portfolio.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on 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.