Here’s Why Larger iPhones Make Sense for Apple

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Is the world’s most valuable company about to rightsize its best-selling product again? Last year, Apple CEO Tim Cook defended the iPhone 5’s new 4-inch screen on a conference call when analysts noted that competitors were focusing on even larger screens. “We put a lot of thinking into screen size and believe we’ve picked the right one,” he said.

Cook’s comments proved fruitful, as the iPhone 5 and its successors broke sales records. During the last holiday quarter, Apple sold 51 million iPhones, the best iPhone quarter in company history. However, it appears Apple will once again rightsize the iPhone’s screen in order to capture market growth and take full advantage of the upcoming holiday season.

Size matters in the smartphone market. Smartphones with screens 4.7 inches and larger are commanding more shelf space and unit share in the United States, according to a new report from the NPD Group. Nationwide carriers devoted about a third of their shelf space to devices with at least a 4.7-inch screen in the second quarter, compared to only 4 percent in the same quarter two years ago. These larger devices also accounted for more than a quarter of sales, up from just 2 percent over the same period.

Apple’s 4-inch iPhone 5 models are some of the few obstacles facing the large-screen market. “While interest among U.S. consumers in larger screen smartphones is growing, sales growth has been relatively disappointing over the past two years due to Apple’s dominance of the market,” said Stephen Baker, vice president of industry analysis at NPD. “All the demand, channel and usage pieces are in place for larger smartphone sales and share to increase. If Apple releases a bigger iPhone it will be the final catalyst for explosive growth in the 4.7”+ market.”

Apple, which currently dominates the smartphone manufacturing market in the United States, is expected to announce a new 4.7-inch and a 5.5-inch iPhone today. The iPhones are rumored to have faster processors, a mobile payment system, and perhaps even sapphire display covers. The new models will mostly likely be available next week, although the larger model may be delayed or in limited quantities due to production issues.

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