Apple's (AAPL) iPhone continues to remain strong, despite the struggles of the high-end smartphone market. The phone is a big reason why Apple was able to beat fiscal third quarter earnings. Given the trends towards larger smartphones, the next iPhone, dubbed the iPhone 6, may be Apple's way of announcing that innovation is alive and well, making customers say "oooh" and "ahhh" like only Apple can.
Apple had better-than-expected fiscal third quarter earnings, due in large part to the 35.2 million iPhones it shipped during the quarter, which was a record. In total, Apple generated $37.4 billion in revenue in the June quarter, with $19.75 billion coming from the iPhone.
Apple may move away from using a number for the next iPhone, which is rumored to come in two sizes, a 4.7-inch version and a 5.5-inch version. The world is increasingly moving to larger phones, according to a recent study from Netbiscuits. The study found that the average size of a phone screen has been increasing, with segments over 4-inches gaining market share. The fastest growth came from the 6-inch and above category.
During the fiscal third-quarter, Apple CEO Tim Cook noted the company saw strength in all of its iPhone segments, as well as across different regions. "We generated healthy growth in our entry priced, mid-tier and lead iPhone categories," Cook said on the third quarter conference call. "I'm especially happy about our progress in the BRIC [Brazil, Russia, India, China] countries, where iPhone sales were up a very strong 55% year-over-year."
iPhone (Photo: Shutterstock)
The new iPhone is particularly important in China, as Cantor Fitzgerald analyst Brian White said in a recent research report the country is set to massive upgrade its high-speed networks. "For example, China Mobile has a big 4G TD- LTE device ramp planned for the second half of 2014, and we believe 4G FDD LTE licenses could also be awarded in the fall, which we believe would dovetail well with our expectation of a bigger iPhone 6 (i.e., 4.7- inch and 5.5-inch iPhones)," White wrote in a recent report.
Aside from the larger phone size, it may allow Apple to charge a higher price for the 5.5-inch iPhone, which may not be shipped until October, due to reported supply chain issues. On Apple's fiscal second quarter earnings call, Cook was asked about a potential price increase, noting only Apple would charge a price for its products that it sees as appropriate."We price things that ... are priced in such a way that we think it's a fair price for the value that we're delivering and we make those on each thing as it gets closer time to come to market."
There will be no major advance like last year, when the company unveiled TouchID on the iPhone 5s, but that doesn't mean Apple is standing still. Leaked photos have suggested the new iPhone will have no bezel, and the glass on the iPhone may actually be made from sapphire, potentially making it unbreakable. Apple has a deal with GT Advanced Technologies, and it's thought the deal is for new iDevices, as GT has said said it expects revenue to be back-loaded towards the second half of this year.
Apple is also likely to update the chip running the phone. Last year, Apple announced the A7 and M7 chips, with the A7 being a 64-bit chip, the first in a smartphone.
Aside from physical features of the iPhone 5s, the biggest change may wind up being iOS 8, Apple's mobile operating system. While iOS 8, which was announced at Apple's developer conference in June, will not have the radical overhaul its predecessor did, there will be plenty of new changes.
For the first time, Apple is is allowing Swype keyboards into iOS, allowing users to swipe words instead of typing each individual letter. It will also offer QuickType, which predicts the words you're going to type.
Apple also introduced two new major platforms, which may be Apple's entry into the Internet of Things: a Health app (HealthKit platform) and as well as HomeKit. The Health app counts calories, measures glucose levels and can communicate with your doctor if you allow it, while HomeKit can help control smart home devices, such as lights, garage doors, locks and other items.
Apple also updated its Messages app, giving it some social networking features. Users can now share voice, video or photo messages with a single swipe, as well as allowing users to remove themselves from ongoing group messages and a host of other features.
Whatever Apple does indeed announce, it's sure to capture the interest and imagination of media, industry analysts, consumers and Wall Street alike. That's "one more thing" we'll all be waiting for.