Everyone bets on bigger iPhone for '14

Logic demands Apple super-size the iPhone screen, but Cupertino doesn't always play rational

Virtually every analyst who follows Apple has jumped on the bigger iPhone bandwagon, asserting that the Cupertino, Calif. firm will step into the quickly-growing large-screen market this year.

"There's demand for these devices," said Ramon Llamas, analyst with IDC, referring to smartphones with larger displays. "Line up the numbers and it says to me, there's a market that shows tremendous growth and there's a niche for these."

Last week, the Wall Street Journal (subscription required), citing the usual unnamed sources, said Apple is planning to launch a pair of larger iPhones in 2014, one bigger than 4.5 inches, the other larger than 5 inches.

The iPhone 5-series, including 2013's 5S and 5C, sport a display of 4-in. measured diagonally, an increase from the 3.5-in. Apple used from 2007 until 2012.

Most sell-side analysts on Wall Street expect that Apple will enter the larger-phone market this year -- although those bets stem as much from their harping about Apple's lack of new products as any prognostication -- but industry analysts have almost unanimously followed suit.

The talk started with the usual leaks from Asian component suppliers, said Bob O'Donnell, chief analyst at Technalysis Research. "For Apple to build something they have to talk to the supply chain, and build screens, even for prototypes. Inevitably, the leaks start at display makers, like LG Display, AU Optronics and the others," said O'Donnell.

As demonstrated last year when pundits nailed almost every aspect of the iPhone 5S, it's impossible for Apple to keep a new product under wraps unless there's a long lead time between announcement and retail debut. One of the last times Apple was able to keep secrets, well, secret was the introduction of the original iPhone in 2007, when more than five months passed after Jobs pulled it from his pocket before Apple started selling the new device.

But a larger iPhone makes much sense, analysts argued.

As Llamas noted, the demand for such devices has accelerated. According to IDC, about 4 million larger-sized smartphones -- dubbed "phablets" by some to denote devices with screens of 5 inches and more -- were sold in 2012, a number that jumped to around 16.5 million in 2013 and will hit 30 million this year. Even that estimate, Llamas said, "now looks to be conservative."

O'Donnell was even more bullish on the category.

"The phablet market will account for one in three smartphones by 2018," O'Donnell predicted. "That's a huge market population that no vendor can ignore."

While the landscape is littered with predictions of what Apple will do -- or, in many cases, what outsiders think Apple must do -- O'Donnell, Llamas and others think the case for a larger iPhone is very solid.

"It makes a lot of logical sense, especially as smartphones are becoming less and less phone and more and more computing devices," said O'Donnell, striking a stance he has held for some time and spelled out in a piece he wrote two weeks ago for the analyst-centric Techpinions.

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