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Will iPhone 6 Cannibalize Apple's Tablet Sales?
Will iPhone 6 Cannibalize Apple's Tablet Sales?
By Jennifer LeClaire / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
JULY
22
2014


Could Apple’s iPhone 6 -- it’s so-called super-size phone due to hit store shelves this fall -- come back to haunt the smartphone maker? Some industry watchers are reporting reason for angst over the highly-anticipated release, while others say the notion that a larger iPhone could introduce risk to the company’s product line is ridiculous.

Come late September -- and in the months following -- we’ll find out who’s right. Apple’s iPhone 6 will debut with phablet-size screens and position Apple to better compete with Samsung. The large-screen phones are rolling out despite late CEO Steve Jobs’ notion that no one would want to buy such a large phone because you can’t get your hand around it. Jobs appears to be wrong, but are analysts right about a potential backfire on the tablet front?

“The larger iPhones may accelerate a fresh push toward larger-screen tablets,” Neil Mawston, an analyst at Strategy Analytics, told MarketWatch in the context of potentially negative impacts on the iPad mini. “The tablet category will need to innovate to differentiate from increasingly outsize smartphones.”

Hurting Tablet Sales?

In a post-Jobs era, Apple seems willing to take the risk -- and market data would seem to confirm that the smartphone maker is pursuing the right path. According to market research firm Canalys, five-inch displays make up a third of the smartphone market. What’s more, smartphones with five-inch and larger screens grew 369 percent -- a substantially greater rate of growth than the overall market.

“This is still a market segment led by Samsung, but the trend is unmistakably toward larger-screen handsets at the high end of the market. It held a 44 percent share of devices with displays of five inches and above, and 53 percent if the view is narrowed to look at 5.5-inch-plus displays,’ said Canalys analyst Jessica Kwee.

Kwee went on to point out how many other vendors, including Lenovo, Huawei, LG and Sony, have also achieved significant volumes in this space and noted that consumers expect high-end devices to have large displays. Kwee predicted that Apple would enter the fray and it is.

But some analysts agree with Mawston: “Large-screen phones have provided some headwinds to tablet demand, and Apple’s iPad growth in particular,” Brian Colello, analyst at research firm Morningstar, told Marketwatch. “If Apple were to launch a large screen iPhone 6 at, say, five inches, it’s certainly possible that these headwinds could intensify even further.”

Apple’s ‘Huge Gap’

We caught up Roger Entner, principal analyst at Recon Analytics, to get his take on the size of the new iPhone 6. He told us he’s not buying into the negativity.

“First of all, it’s better to cannibalize your own product than give that pleasure to someone else,” Entner said. “Second of all, all the growth in smartphones over the last two years came from either the sub-$100 market or the greater-than-four-inch-screen segment.”

Entner has long called out the “huge gap” Apple has in the four- to five-inch screen size and the massive number of lost sales because of it. As he sees it, people who would like to have an iPhone 6 are not going to buy fewer iPad minis.

“Tablets and smartphones are two separate segments. Just because BMW sells motorcycles doesn’t mean that their car sales will decline,” Entner said. “The downside of not offering a larger phone is a lot bigger than the downside of offering one. A large iPhone is going to be a big hit -- and would have been a big hit a year ago, too.”

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Posted: 2014-07-23 @ 8:04am PT
As long as it still fits in my pocket...

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