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Apple Missing Out on the Explosive Growth of Smartphones with Larger Displays

1. Cover 5 inch smartphone growth
In 2013 when Apple failed to deliver an iPhone model with a larger display it was a real head scratcher. An internal presentation slide at Apple surfaced during the Samsung patent infringement case which showed that Apple is more than aware that the "strongest demand" in smartphones is coming from less expensive phones and those with larger displays. As noted in our cover graphic, a new statistical chart shows us the breakdown of smartphone sales by display size yet leaves out one of the most important statistics.


The most important statistic regarding smartphones with 5" and larger displays is that this segment grew at a stunning 369% this quarter. It's a substantially greater rate of growth than the overall market worldwide.


The study showed us that in Greater China this segment grew 34% and 39% in Asia Pacific. At the moment, this segment is led by Samsung with a 44% market share. Many other vendors, such as Lenovo, Huawei, LG and Sony, have also achieved significant volumes in this space with products at the top end of their portfolios. While it may only represent 22% of the market, it's the higher-end of the market which is usually dominated by the iPhone.


That's why this is a trend that Apple can no longer ignore or deny. The internal presentation slide illustrated below actually surfaced during the Samsung patent infringement trail. It clearly illustrates that Apple has been aware of this trend for some time now but were slow in reacting to it.


2AF - Apple slide on smartphone trends

In fact Phil Schiller mocked the larger display back in 2012 during his introduction of the iPhone 5. In Describing the new iPhone, Phil Schiller stated that "It is really easy to make a new product that's bigger. Everyone does that. The challenge is to make it better and smaller." His point was well taken for 2012, but in 2013 … they failed to follow up with an iPhone with a larger display.


The Canalys report adds that "Consumers now expect high-end devices to have large displays, and Apple's absence in this market will clearly not last long. It is notable that 5" and above displays featured on almost half (47%) of smart phones with an unlocked retail price of US$500 or more. Of the remaining 53% of high-end smart phones, 87% were iPhones. Apple plainly needs a larger-screen smart phone to remain competitive, and it will look to address this in the coming months."


Last week a rumor surfaced stating that the 5.5" based iPhone could debut as early as this September. However, earlier rumors stated that Apple could delay this particular model in the hopes of using a thinner battery that would allow them to deliver a new thinner iPhone Air.


In an environment of endlessly changing rumors, we're at a loss as to which rumor is more probable. Yet with that said, it would be considered a massive failure on Apple's part if they were to miss this exploding trend for yet another Christmas season based on technicalities. Most would view such a miss as Apple simply losing their touch with the market. That's why last week's rumor caught our eye. It may be wishful thinking, but in light of this latest study, it's hard to believe that Apple has any intention of being too late to the party.  


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