Apple (AAPL) investors are keenly looking forward to iPhone 6, to be launched later in the year. It will most likely feature a larger screen than the previous iPhone models -- something that interests consumers worldwide.
The iPhone is Apple’s flagship product for good reason -- its demand just keeps getting better with each launch and it contributes substantially to the total revenue. iPhone 5s has already surpassed iPhone 5 in popularity, and now the iPhone 6 launch could turn out to be another ace up the company’s sleeve. Can this new model push the impressive sales further? Let’s dig in.
The Sales Driver
Apple’s third quarter earnings of $7.75 billion were mainly driven by strong smartphone sales. Apple sold close to 35.2 million iPhones, a 13% jump from the same period last year. Apple CEO Tim Cook said that the quarter’s growth was fueled by strong sales in the iPhone segment. With a better and bigger version, the company might touch newer highs.
The existing iPhones either have a 3.5 or a 4.0 inch screen, but for the first time, Apple may launch a 4.7-inch iPhone and another version with a 5.5 inch screen, which might be a “phablet” device. The phablet model could compete with Samsung’s (SSNLF) Galaxy Note and help Apple capture the rapidly improving emerging markets.
As per Counterpoint Research, 98% of the android smartphones (with a price sticker of around or over $400) that were sold in May had a display greater than 5 inches. So, Apple would want to tap this area to continue with the sales rise, and compete better with the products of Google (GOOG) and Samsung.
The management has remained hush-hush about the smartphone, including the price, but the larger screen might come with more competitive pricing, while the smaller model could possibly match the price of iPhone 5s.
The China Edge
In China, Apple’s smartphones were not too famous until last September. The launch of iPhone 5s on September 20, 2013 made waves in China, making Apple the third-largest smartphone player in the nation. Also, in the third quarter, Apple’s sales in the emerging countries were led by the BRIC, and China remained a bright sales spot with iPhone sales increasing 48%, double the rate of the market as a whole.
As bigger-screen smartphones are enticing Chinese consumers, Apple’s iPhone 6 might find its best takers in China, where smartphones are replacing personal computers as the main computing device.
Could Be Rough and Tough
The eighth generation smartphone could be made of sapphire glass, which is virtually scratch free and “nearly indestructible”. The only iPhone version currently of sapphire glass make is the iPhone 5s, which has been the top selling smartphone in the U.S. at all major carriers, including Verizon, AT&T, Sprint and T-Mobile.
Recent reports suggest that Apple and its partner GT Advanced Technologies are expanding capacity of their Arizona plant that produces sapphire glass. Using this glass would add to the toughened look of the iPhone, protecting its interior from damage.
Apple is a technology leader and knows well how to read the pulse of its customers. High demand for upgraded versions and better growth expectations in China will help boost iPhone sales and Apple’s revenue in the future. It would be worth watching how far the launch bolsters Apple’s market share.