BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Apple: Time For An iPhablet?

This article is more than 10 years old.

Has the time come for Apple to jump into the market for extra large phones?

Barclays analyst Ben Reitzes set out in a research note this morning to nudge the company in that direction. He contends that one of Apple's biggest challenges in 2013 will be the fact that the company has chosen not to get involved in the market for phone measuring 5 inches or larger, where Samsung and others have found considerable success. (At CES, Huawei was actually showing on a 6-inch phone.) The iPhone screen is 4 inches; older versions were 3.5 inches.

Reitzes writes that Apple has chosen to maintain the current size for easier one-handed use. But he thinks that factor is now largely irrelevant.

"One-handed use is arguably less important since phone calls are becoming less important than navigation, texting, videos, books and Web access for many," he writes. "Also, the larger screen seems to be more popular outside of the U.S. and the phablet has significant momentum in China. Our global tech team believes that growth for the 5”+ smartphone market will exceed that of the overall market, rising from 27 million Phablet units in 2012 to 230 million in 2015 at a CAGR of 105%, not including a new iPhone version."

Reitzes sees Apple in mid 2013 introducing a lower cost phone targeting emerging markets as well as an iPhone 5S upgrading the current top of the line. "We believe the most important advances for the iPhone in 2013 will be actually be improvements to iOS and its services, which can expand the market for Apple," he writes. "We believe Apple can turn perceptions around with a real move into payments, an integrated iOS-led television service and improvements to iCloud (including subscription-based services)."

But he's holding out hope for a 5-inch iPhone; he thinks the company could head in that direction by A4 of this year or some time in 2014.

"By the time this product comes to market, Apple would likely need some incremental innovations in it vs. the current market of 5” products including the inclusion of NFC, advanced imaging features and improvements in navigation," he writes. "We believe that an Apple Phablet or large screened phone could offset some of the ASP declines we expect from the production of low-end phoned designed for emerging markets. We believe an Apple Phablet could boost blended iPhone ASPs by about 5% and could add $7 in EPS in calendar 2014 if Apple sold ~40 million units (20 million incremental, assuming a 50% cannibalization ratio of higher end iPhone 5s)."

Before you write off the idea as unlikely, keep in mind that Apple initially rejected the idea of a 7-inch tablet - and the iPad mini has been wildly successful.

AAPL is down $10.27, or 2.3%, to $443.35.

Related: