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Supersize iPhone, a big risk for Apple


By Quentin Fottrell

As excitement (and rumor) build ahead of the expected release of Apple’s supersize iPhone this fall, experts say Apple executives and shareholders also have considerable reason to be anxious. Apple waited to release a “phablet” version of its signature product, they say, because of the potential negative impact on iPad sales.

Apple is expected to launch the iPhone 6 in late September. Analysts predict that new iPhones with screens measuring 4.7 inches and 5.5 inches (versus 4 inches currently) will be launched to compete with the army of larger Android smartphones on the market, particularly Samsung’s Galaxy phones. “Apple may choose to launch the bigger handset at a later date, but there’s no denying that consumers have a growing appetite for bigger screen phones,” says Mark Spoonauer, editor in chief of Laptop Mag. “A larger screen will also allow Apple to cram in a bigger battery, [addressing] another huge complaint about the iPhone 5S.”

Apple’s former CEO, the late Steve Jobs, wasn’t keen on bigger smartphones. “You can’t get your hand around it,” he said at a 2010 news conference. “No one’s going to buy that.” But smartphones with 5-inch displays now account for one-third of the market, according to analyst firm Canalys. Over 279 million smartphones were shipped in the first quarter, up 29% from the year-earlier quarter. But shipments of smartphones with 5-inch and larger screens rose 369% over the same period. “The trend is unmistakably toward larger-screen handsets at the high end of the market,” Canalys concluded.

So why did Apple hold off? A 5.5-inch iPhone, subsidized by wireless phone providers, would make consumers think twice before purchasing an unsubsidized iPad Mini, says Neil Mawston, analyst at Strategy Analytics. “The larger iPhones may accelerate a fresh push toward larger-screen tablets,” he says. “The tablet category will need to innovate to differentiate from increasingly outsize smartphones.” [eap_ad_2] Apple did not respond to requests for comment.

A larger iPhone could also hurt the original-sized iPad, Spoonauer adds. “The rise of so-called phablets has slowed sales of traditional tablets,” he says. International Data Corporation recently lowered its 2014 world-wide tablet shipment forecast to 245.4 million units from 261 million units; the lower figure would represent an increase of just 12% year-over-year versus 52% in 2013. (Apple sold 16.35 million iPads in the second quarter, a 16% drop on the same period last year.) People are holding on to their tablets longer, but the market share of larger phones has more than doubled, to 10.5% in the first quarter of 2014, with over 30 million units“shipped that quarter.

“Large-screen phones have provided some headwinds to tablet demand, and Apple’s iPad growth in particular,” says Brian Colello, analyst at research firm Morningstar. “If Apple were to launch a large screen iPhone 6 at, say, 5 inches, it’s certainly possible that these headwinds could intensify even further.” But Jobs’ dislike of phablets meant Apple stuck with the 4-inch screen iPhone, he says. “Apple focused on building a phone at 4 inches that could be controlled with one hand, but simply misgauged demand for even larger screen devices built by Samsung and others,” Colello adds.

Others aren’t counting down the days to a larger iPhone, however, and some even foresee the return of the dreaded fanny packs. “I find it incredibly ironic that for years we worked hard to build smaller, lighter devices that fit easy into a pocket, and now we are seeing the reverse of all of that effort,” says Andrew Seybold, an independent consultant in wireless technology in Santa Barbara, Calif. But even he says the arrival of a supersize iPhone was inevitable: “Apple did not want to cannibalize the iPad Mini market, but given Samsung’s success with bigger screens it had not got much choice.”

A perfect device would expand to a tablet and contract to a smartphone, says technology consultant Jeff Kagan. “That would make it easier and less expensive for users,” he says. “However, no company has invented that yet. (MarketWatch)[eap_ad_3]

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