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Demand for extra-large iPhone may be overstated

Gregg Keizer | June 3, 2014
Although Apple watchers expect the company to boost the iPhone's screen size this fall, demand for a very large display is actually weak among iPhone owners in China -- and even weaker in the U.S.

Although Apple watchers expect the company to boost the iPhone's screen size this fall, demand for a very large display is actually weak among iPhone owners in China and even weaker in the U.S., survey data shows.

According to Kantar WorldPanel Comtech, less than 5% of iPhone owners in China who upgraded over the last year deserted to Android and opted for a device with a screen 5.5-in. or larger.

Such changes were even rarer in the U.S., where just 0.3% abandoned iOS for Android and in the process bought a 5.5-in. or larger smartphone.

"People say that Apple needs to have a bigger iPhone," said Carolina Milanesi, chief of research and head of U.S. business for Kantar. "But the numbers don't really show that."

Or at least not an iPhone with a mammoth 5.5-in. screen. And there are other reasons why Apple would be hesitant to go extra-large.

"Five-point-five, done well, is a nice form factor," said Milanesi, "but something smaller, like 4.7-in., would be more mainstream. Given that Apple usually has only one [screen size], they're more limited in how much they can play with size."

Because Apple doesn't mimic the broad portfolios of Android smartphone makers, particularly fierce rival Samsung, and has essentially one shot each year, it will probably play it conservative, said Milanesi, explaining why she believes a 5-in. or larger iPhone is out of the question.

Kantar's data doesn't suggest that Apple will flop with a larger iPhone, simply that it's unlikely the screen size will play an overwhelming part in customer decisions whether to upgrade.

More important, said Milanesi, was the distribution of the various models now in U.S. and China consumers' hands. In the U.S., the iPhone base is now split between the iPhone 4 at 22%, the iPhone 4S at 27%, the iPhone 5 at 24%, and the iPhone 5S at 11%. China's distribution skews toward older models, with 33% on iPhone 4, 36% on iPhone 4S, 15% on the iPhone 5 and 7% on the iPhone 5S.

"The age of a phone matters, and Apple's installed base mix shows strong potential for upgrades," Milanesi said in a May 29 blog. In the interview Friday, she argued that the upgrade pool was bigger this year than last because of the year-on-year growth of the installed base and the large numbers of customers who own a model two years old or older.

But a new model and a larger screen don't guarantee big sales. "Price matters, especially in China," Milanesi said of that more volatile market, which relies less on carrier subsidies than does the U.S. "The question again this year is what they do in the lower end of the market."

 

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