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Will Launching The iPhone 6 Early Benefit Apple?

June 21, 2014 | About:

In its most recent earnings report, Apple (NASDAQ:AAPL) reported blow-out numbers relative to its own guidance and the most optimistic of sell-side estimates. As a result, Apple's shares have been on an absolutely wonderful run. While it's clear that the iPhone 5s had a lot more juice in it than what many of us had believed even in light of the trend toward larger phones, Apple would still benefit immensely from launching the iPhone 6 early, as it has been rumored that it will.

Strike while the iron is hot
The iPhone 5s and even the 5c have enjoyed tremendous momentum since their launches last September. Apple's iOS 7 has been well received, and touch ID has proved to be a key differentiating feature against the various Android devices (even against ones with fingerprint sensors -- Apple's implementation still appears to be the best on the market). However, as the various Android vendors start implementing some of these features, Apple is going to want something new to drum up excitement -- the iPhone 6.

While we don't know a whole lot about the iPhone 6 officially, we can expect that it'll be bigger (4.7 inches and maybe a 5.5-inch model), faster, thinner, and even better than the iPhone 5s. In fact, the 4.7-inch size is likely to prove to be a nearly optimal compromise for those who still want one-handed operation but at the same time want more screen real estate. And, of course, Apple is sure to soup-up iOS 8 to take full advantage of what the new iPhone hardware will enable.

All of this adds up to a product that will be able to keep the momentum going.

Pouring cold water on the next-generation Android phones
While Apple has a clear software, platform, and ecosystem advantage, there is no doubt that there are plenty of customers who would love to go back to iOS if they could get a larger phone. Not only would Apple get the benefit of the current loyal Apple customers upgrading to the latest-and-greatest sooner rather than later, but a slightly pulled in iPhone 6 launch would keep those customers -- the ones who would love to go Apple but can't live without a larger device -- from going with an Android device (or -- gasp! -- a Windows Phone) this round.

Will there be some Android users who prefer Android? Of course. Will there be those who absolutely need an OLED display, crazy high pixels per inch, or a 20-megapixel camera? Of course. However, the launch of the 4.7-inch iPhone should grab a pretty solid chunk of Android users, and maybe Apple will try to go after the "spec-crazy" crowd with an even more expensive 5.5-inch variant.

Apple doesn't need all of the high-end smartphone business, but it will benefit immensely from keeping as much of it out the hands of its competitors as possible. A larger-screen iPhone will probably do that, and the sooner it can, the better.

There is no smartphone vendor with the brand cachet and the software ecosystem "stickiness" that Apple has. As the company rolls out products that appeal to an even broader swath of the high end market, it should capture more share and ultimately continue growing profits at a respectable rate. Pulling in the iPhone 6 for an August launch, as suggested by some reports, would probably be a smart move, even if in the long-run being a month early isn't a make-or-break proposition.

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