iPhone 5: How bigger screens could lead to best in class profit margins for Apple

How bigger screen iPhones could lead to best in class profit margins for Apple

iPhone 6 is already the topic of rumors and speculation. Over the weekend Bloomberg reported on the possibility of Apple moving to larger display sizes next year. Rene Ritchie has been writing about just that here on iMore for a while now as well. Now, some of us may remember Apple bashing large screens in the past. Part of that was technology. Competitors were using OLED and PenTile subpixels to get to larger sizes, and Apple argued color saturation on those displays wasn’t good enough. Tim Cook has always been clear on the idea that they don’t want to sacrifice on quality to deliver size, whether this quality sacrifice come from color reproduction, power consumption, durability, or something else. Another part of that was one-handed ease of use, which Apple in the past equated to hardware narrowness, but which everything from BlackBerry 10 to iOS 7's gesture navigation have shown can also be handled by software. If there is one thing that’s certain (other than death and taxes), it's that technology keeps improving. Whatever compromises Apple felt users would face with a larger iPhone screen will eventually be bypassed. And when that happens, it is only logical to assume larger iPhones will follow.

And heck ... if the screens for 2014 will be good enough, why not marry them with some additional improvements such as pressure sensitivity or curved glass too? And if Apple can do all of this while pushing the screen close to the edges of the device then it might just bring us the best possible mix of screen size vs. device size, while maintaining that sense of industry-leading industrial design. It's what they just did with the iPad Air, after all.

Personally, I’d love to see pressure sensitive screens from Apple. It would add a whole new variable for user input. I’d love to use a “harder press” rather than a (slower) long-press, for example. I’m sure Apple’s software gurus can come up with a million ideas better than mine.

Those factors, if Apple can deliver them, are what lead to best in class profit margins, driven by high average selling prices (ASPs). Doing this is what makes Apple so darn profitable.

The iPhone is the only Apple device (with a screen) that doesn’t have size options. So it seems obvious that Apple will add size choice to the mix. They need enough options to satisfy a global market with varying desires. Some people will want to buy a huge screen since it’s their only device. Others will go for something that easily fits in the pocket because they switch to an iPad when they feel like sitting down for a while.

But it also seems obvious that Apple isn’t going to move to bigger screens without doing something else. Apple doesn't work in a “me too” fashion. To paraphrase Steve Jobs, they figure out the experience they want to deliver, than assemble the technology they need to do it.

Next year, that experience could very well result in a bigger iPhone.

Chris Umiastowski

Chris was a sell side financial analyst covering the tech sector for over 10 years. He left the industry to enjoy a change in lifestyle as an entrepreneur, consultant, and technology writer.

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iPhone 5: How bigger screens could lead to best in class profit margins for Apple

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Well said. I for one would love a slightly bigger screen, but nothing more than 4.5 or 4.7 in. Apple is the best at the "experience" their products offer, so I would trust their judgement on this

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Apple, can you do this one thing, just ONE thing... If you make these larger screen iPhones, put in a larger battery, not thin like paper but a decent battery that can hold a candle to the Note 2/3 or LG G2?? That's the only thing the iPhone is missing, great battery life.

One can only assume the larger iPhone would be the cost of a mortgage, at least you can give it great battery life.

Agree. The race to paper thin is pointless. Let's get a larger battery inside the phones. I'll take a little thicker phone with having a huge battery inside

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I think you make a good point about battery life. I would get I bigger phone if it meant more battery life. Otherwise I'm happy with the current screen size.

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It's about time we get a five inch iPhone, not just stretched but bigger in both side and top bottom!

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"Whatever compromises Apple felt users would face with a larger iPhone screen will eventually be bypassed."

Can someone explain me how technology can bypass screen size?

Sorry, no ... but I can explain to you that you're misunderstanding the issue. It's quite clear Apple hasn't been against the actual size getting larger, and I'll leave it to you to read again to understand.

I would like to have a bigger screen, but if they price the phone greater than their competition, apple can potentially hurt themselves. Eco-systems are not a relevant factor if I get hosed on the cost of updating to a slightly better screen size that your competition has offered for a few years already. I can easily jump to the note 3 or galaxy s4 and not miss out.

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What's is wrong with you guys? We just recently receive 2 new iPhone from Apple can we just enjoy them? Why talking about bigger size the actual size are perfect, if I want a tablet I use an iPad mini like the one we have at home.

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Have you seen any 4.5 to 5-inch tablets? They start at around 7 inches. Comparing a 5-inch iPhone to a iPad Mini is silly.

Couldn't agree more. You'll only see that ridiculous comment from those who worship the 4" device and are now terrified at the prospect of a larger screen.

Well seeing how apple says they won't go smaller on the iPad mini there are lots of phones that are smaller. 4.5-5 would be nice and not everyone wants to carry two devices around when they could do everything with a larger phone.

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If you look at Bloombergs history of reporting, they have always been solid in being consistently wrong.

That is all.

I'm kind of offended by the headline. I read the article because I was interested in how Apple might improve profit margins by moving to larger screens, but I don't see a single reason here that actually suggests that Apple's margins will be improved by large screens.

- most obviously, Apple already has best-in-class profit margins; they don't need to increase screen size to do it, and larger screens aren't likely to be cheaper unless they reduce quality
- the primary factor preventing them from increasing size is unarguably inertia; the OS is designed for one resolution (plus a deprecated two-gens-old resolution), and increasing size introduces issues that presumably they haven't solved yet
- tech has never been the barrier to larger screens, and the points about OLED are completely unrelated to screen size--there has been talk of reducing thickness with OLED before but this is unrelated to "screen size" i.e. screen area (I don't believe the depth of a screen can reasonably be considered a component of its size in this context)
- rumors about pressure-sensitive screens and curved glass are interesting, but the author puts forth no concrete reasons that these would increase margins: adding to the BoM without increasing price is a recipe for lower margins, not higher

If Apple releases an iPhone with a 4.7 inch screen, I will buy it the day it's released. I could be tempted by a 5.5 inch, but that might be too big of a device to carry around in a pants pocket. Then again, maybe not. I love my iPhone, but I have poor vision, so a larger screen would be a huge huge mega huge big deal for me.

Agree! What we need right now is great battery life. And since apple plans to do larger screen, why don't you put a smart stylus pen inside? like having a play and pause button for music or video, next button for music or presentation?