Analyst: Apple is ‘leaving money on the table’ by not pursuing phablets

By , Feb 5, 2013

iphoneplus-all-models-extrawide

With half the respondents voting for an Apple phablet in our non-scientific poll and the growing number of pundits making the case for a 5+ inch form-factor iOS device, little wonder that analyst are joining the fray and calling for a jumbo-sized iPhone. A good example is Sterne Agee’s Shaw Wu, who opines that Apple is losing out by not pursuing a phablet of its own.

We’re not sure what to make of this. Apple under Steve Jobs stubbornly stuck with the ’3.5 inch fits all’ philosophy. With the iPhone 5, four inch became the new 3.5 inch. But with the growing number of users yearning for an even larger iPhone and with ten million Galaxy Notes shipped in 2012 and another ten million expected in 2013, maybe analysts are right…

From Wu’s note to investors (via AppleInsider):

We believe AAPL is leaving money on the table by not participating in larger touchscreen form factors. But more importantly, we believe AAPL needs to reclaim high-end leadership as that is what brand is about. Sure, iOS, iTunes and the App Store are great, but it is clear that many customers want larger screens.

Now, Tim Cook is certainly his own man and I’d guess that anything is possible. We have yet to see whether Cook is married to the four-inch form factor because the iPhone 5, after all, is a Steve Jobs product.

iPhone illustration (Felipe Luchi 001)
This iPhone illustration for Go Outside Magazine via Brazilian illustrator Felipe Luchi.

For what it’s worth, Cookl told investors on a conference call that Apple (for now) is rolling with four-inch designs:

We put a lot of thinking into screen size and believe we picked the right one.

We shall see what the future holds.

The fairly accurate Japanese blog Macotakara claimed in March 2012 that Apple was working on a brand new iOS gadget, due in 2013 and sporting a display measuring five inches diagonally and having a 1,600-by-960 or 1,28-by-960 pixel resolution.

Heck, even Steve Wozniak is warmed up to the idea of a Gorilla-sized iPhone. According to Kantar Worldpanel ComTech, the WPP-owned market analysts, there’s a correlation between screen sizes and usage patterns.

Kantar Worldpanel ComTech (Q212, smartphone screen size)

In a nutshell, owners of bigger smartphones surf the web and watch videos more often than those who have devices with smaller displays. And the more people interact with their devices, the more likely they are to remain loyal to the brand.

iPhone 5 Galaxy S III

I wouldn’t rule out an Apple phablet, especially in light of surprising sales of Samsung’s Galaxy Note. According to Ben Reitzes of Barclays, sales of 5-inch phablets will grow from 27 million in 2012 to an astounding 230 million in 2015.

By the way, the South Korean maker just acquired a five percent stake in graphics tablet maker Wacom, apparently in a bid to double down on the stylus.

I’m not saying Apple should make a stylus-based device for the heck of it.

But something between the four-inch iPhone/iPod touch and the 7.9-inch iPad mini would admittedly make up for an excellent media consumption device.

ipod_touch

It would also be the perfect portable app machine and handheld gaming console.

Last month, China Times cited Taiwan-based Commercial Times which predicted one of the 2013 iPhones would be a larger 4.8-inch model.

Sources who spoke to DigiTimes said ‘no’, adding such a device is slated for a 2014 introduction.

Do we really need a bigger iPhone?

And would you buy one?

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  • CollegiateLad

    “In a nutshell, owners of bigger smartphones surf the web and watch videos more often than those who have devices with smaller displays.”

    Browsing analytics don’t back your claim. They say iOS users browse more than all their competitors combined. In fact, according to a post made recently by IDB, iOS just passed Nokia for the global web usage crown.

    What am I missing?

    • Obsidian71

      You’re missing the reality distortion field created by analysts and bloggers. They contradict themselves almost on a weekly basis. Prescription: large grain of salt.

    • Daniel

      Probably ones who buy iPhone have enough money for 3G/4G contracts. If you compare with any other brand and model, as analysts said, people buy smartphones just because is fancy and affordable for their wallets.

      Let be realistic, people who buy iPhones they overuse them.

    • Kurt

      It has to do with Safari vs, the the default browser used in Android. People mostly use Safari, vs most people dont use the default Android browser (the others are considered). It’s not based on the OS. Though, it can, and should be.

  • http://twitter.com/iPod_touch Jordan Dixon

    Are you sure your little graph isn’t just for Android phones? Because guess what? You can’t play most android games unless you have a 5″+ screen, because those are the only Android phones with good enough processors. Smaller screened Android phones also tend to be cheaper, hence why fewer apps are used on those – people aren’t willing to buy them.

    • Daniel

      That’s it.

  • http://www.facebook.com/profile.php?id=1284756242 Kell Richardson

    It’s not just that they are “leaving money on the table.” They are bleeding customers daily that move to the 5+ inch form factor. These are dedicated Apple customers. Entire families, iPad, and Mac owners as well, not just single device owners.

    • Falk M.

      This. Not sure I’d get a 5incher, but there are two key reasons my best friend will not get the iPhone 5:

      a) Too limited OS
      b) Screen is still too small

      • Kurt

        iOS has great third party apps. But there are enough great third party apps else where too. And in the Android camp their OS is better and the phones are better…oh but wait they are plastic, so what, I’ll take being able to replace my battery and having plastic then having glass/metal and having to be careful with my usage during the day.

      • Falk M.

        IMHO, the phone is not the problem, the problem is that there is one size missing for apparently a lot of people.

        Also, being ABLE to use a stylus to make handwritten notes would be nice. And don’t tell me about wrist protection on a 4″ or 5″ screen… Whenever I tried it, didn’t work.

        On top of that, and I didn’t dare trying to relax and test this scenario: my pinky. It rests on the surface I write on all the time normally (for me personally that is more relaxing I think) and no wrist protection is going to counter that.

        The S-Pen has quite a beefy pressure sensitivity (128 levels I believe for the Note phones) and well, no wrist protection is needed.

        All that is very special though and I think Apple should at least offer this on the iPad. Phone, maybe not.

        Back to topic though, I think Apple needs to massively step up their game and relax some App Store policies and add some more system integration APIs (like controlling apps with Siri, that’s just one very popular example though) and needs to make it possible for apps to work together better.

        Not even Android is doing it “perfectly”, so Apple doesn’t just have to copy a concept and catch up, they could even claim innovation.

        Yet, here we are, app switching all the time, torturing our home buttons, sometimes not being able to do one work in a nice integrated workflow, but having to switch, switch, switch…

        You might say your usage doesn’t need all that, FAIR ENOUGH! Really! :) No sarcasm at all, but there are some folks who are craving for some progress.

        I like that Apple tries to keep stuff simple, but they are not executing that idea very well and are limiting everyone who wants to go a bit further a whole lot.

        Their desktop OS manages to make this happen fairly well and seeing how security seems to be their reason of so many limitations I imagine, I hope this thought of “let’s try to lock stuff down” doesn’t ever propagate to OS X, at least not in a manner of “no ‘jailbreak’, no access”, as it becomes more and more popular and a bigger target for malware and malicious people.

        Overall I’m rather happy with Apple and they still lead the pack if you ask me and there are many reasons not even in their direct control that this will be the case for a long time to come, however, I dearly hope that they change some things in iOS that make it rather awkward to use at times.

        Heck, even I am not thinking iOS needs an overhaul both visually and technically, which I long rejected, then again I only started using iOS a little over 2 years ago. :)

        I kinda see how people got fed up with some things earlier especially in the light of a maybe not generally better Android, but an Android that exceeds a bunch of possibilities of iOS and isn’t introducing features as slowly as iOS.

      • Kurt

        +1 Lots of awesome points. I have been using iDevices since 2007 and been jailbreaking since iPhone OS 1.1.4 So for me, iDevices are ugly and outdated. But I know that will never change so I try to ignore it. So what I want is features/features/features. It’s nice that grandparents can use iOS, but if they can use it, that means its not that great. Having floating apps, the stylus that can act as a mouse hovering over tabs, etc etc. man we are lacking in so many areas. Why do people think iphone is the best phone? It’s made of nice material, has the best apps, but really, thats where it ends. Bloggers need to write more articles showing they are not happy with Android being so superior. This will make Apple change.

  • Gray

    I’ll admit that 3.5″ screens are a little bit small. Moving from a Galaxy S to a 4S has been a little awkward, and I find myself struggling to play Heroes of Order & Chaos with such a small screen. In addition, it’s pointless to try to sketch up anything with a drawing application…

    However, with the iPad Mini at 7″, the iPad retina at 10″, and the iPhone 5 now at 4″, it’s at a perfect ratio. The three tiers are split by 3″ screen size differences. Yes, I’m aware that the iPhone 5 is taller rather than it is wide, but it’s still fine for me. My 4S doesn’t feel /that/ small except with some minor features like those mentioned above. There’s not really much need to expand on size from 4″ honestly.

    • Kurt

      If 4 inches is fine for you than thats great. Stick with Apple if you are ok with the OS. More videos I watch about Samsung devices the more I’m wowed and want to tell my wife “Oops I must have lost my iPhone” so I can run out and buy a note II. I miss the days where I liked my device :( There is so much we just can’t do.

      • Falk M.

        Dude, just tell your wife you’ll sell it and get the device you want.
        We all make mistakes.

        If your wife doesn’t get it, I think she’s not being a very understanding wife and should face reality.
        She’s not going to stick to something she doesn’t like anymore either, is she?

      • Kurt

        But I’m living off of her money. I’m too busy swimming and sleeping.

      • Falk M.

        Hehe, classic! :P

      • Kurt

        jk~

      • Gray

        I’unno. There’s more things that I can do on my iPhone that I couldn’t on my Android. The response time is better, the multitouch sensitivity is improved, the performance is a lot more stable. The only downside, at all, is the screen size. But for anything except gaming, it’s tolerable. I watch videos on a television, not a smartphone. But that’s just me. Haha. It’s really down to preference.~

  • http://www.facebook.com/melihgonenli Melih Gönenli

    nope

  • djmobil2

    After using a Note 2 for a while I can tellthat I’m not going to turn back for an iPhone 4S. My wife actually has the 4S and when I look at her iPhone screen I’m wondering how much I was pleased with a 4″ display before. She’s eager for the 5S and for me, well a 5″ to 5.5″ apple iPhablet would be great. Of course there’s a size for every taste and a lot of people are comfortable and pleased with the actual iPhone screen size as I was before trying something different.

  • http://twitter.com/MichaelJDelaney Michael Jay Delaney

    After moving to the iPhone 5 I feel empty inside when I use an app that’s still got 3.5″ settings or a friend’s 4(S). I wouldn’t be able to go back to the 4S but I think 5″ would be too much.

  • http://twitter.com/Fredmwangi Fred Mwangi

    We need/want bigger screens, even on the 5 I hate browsing the web. I’m gonna end up having 2 phones soon if things don’t change

  • BoardDWorld

    A phablet is a horrible device, I still can’t believe my eyes when I see someone talking through it. It’s like when you walk up the street and you see someone with their pants hanging down with their underwear in full view. 12 billion in advertising seems to be paying off for the time being. To note apple is still the only vendor giving actual sales numbers and not shipped numbers…

    • Kurt

      How many ‘minutes’ a day do you speak on the phone? me? a few minutes and then the rest of the day if I had a note 2 I could use the big gorgeous display. Let me look like an idiot for minutes a day and the rest of the day you look like the fool squinting to look at your little device.

      • BoardDWorld

        What interests me most in your reply is you recognise that you look like an idiot. That tells me a lot about the amount of actual sales Samsung would make, not just shipped. Never had to squint, that’s what double tap is for…

        Now in recognising you look like an idiot while speaking through it you’ll then have to accept you’ll look like an idiot for owning it as everyone knows you’ll eventually speak through it. So essentially you always look like an idiot while displaying it in public.

        I’m sincerely sorry you bought one… & I don’t have to mark you down to feel better.

      • Kurt

        Your reading skills in English is impeccable.

        I clearly stated “if” I had a note 2. I don’t have such a good phone. I only have an iPhone unfortunately.

  • http://www.eraser.org B. Braun

    Yes Mr. ANALyst, that’s what Tim Cook said before, Stocks are not the focus, people are te Focus, so go on and buy your plastic phablet from Sumsing…

  • Hyr3m

    Please Apple, don’t make a phablet! If you did I would have to admit (again :/ ) that you’ve had a good idea and I’d rather you stay asleep and die slowly.

  • eyeseeyou

    I’d go for a ipad mini “nano”. Same form factor but a phone with retina screen.