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Mobile Devices

Apple Joining Rapidly Expanding Market for Larger-Sized Smartphones

02 December 2013

Apple Inc. has reportedly begun to invest in the development of larger 4.7-inch and 5.5-inch displays for its next-generation iPhone products in a bid to capitalize on the spectacular growth of a fast-rising market, according to a new Small and Medium Display Handset report from IHS Inc.

Apple’s entry, once confirmed, means the electronics giant will join other smartphone original equipment manufacturers (OEM) in pursuing larger displays for new smartphones, a segment that will see worldwide volume quadruple this year. Global shipments of smartphone displays bigger than 4.5 inches diagonally are expected to reach nearly 431 million units by year-end, up from about 99 million units 2012.

Another sizable increase in the market is projected for the following year when shipments surge to 644 million units in 2014, up an anticipated 49 percent from 2013.

Larger smartphone displays are fast gaining popularity among consumers because the bigger available screen real estate can hold more pixels, enabling higher resolutions as well as more content to be showcased on the screen. The growing demand for larger smartphone displays is further supported in Asia, where bigger smartphones have become fashion accessories.

The emerging trend for larger smartphone displays is further supported by the rise of so-called phablets, which are smartphones designed with large tablet-like interfaces typically featuring a diagonal-display measurement of 5.5 inches or larger.

Dissecting the Apple: which way might the company turn?

As news of Apple’s reported large smartphone display developments circulate in the headlines, the question on everyone’s mind is which size might Apple choose to go with first?

Given Apple’s strategy of maintaining a premium smartphone portfolio and its historical strategy of only releasing tried-and-tested innovative designs into the market, it’s unlikely that both display sizes will be debuted at the same time, IHS believes. In particular, development of a new display meeting Apple’s specification requirements will take time.

Of the two possible sizes, a 5.5-inch display would launch Apple into the phablet market. This is a segment of the smartphone space where the larger display of the phablet makes one-handed use a challenge, requiring a stylus or other added input component. The current phablet market features devices from top brands like Samsung, Sony, HTC and Huawei, along with many others.

Apple will likely not enter the phablet segment in order to differentiate itself. Instead, the company may secure its position in the high-end smartphone segment. Already, Apple warrants premium pricing for its use of challenging display specifications, as well as enhanced features like in-plane switching (IPS) display mode for wider viewing angles and integrated “In-Cell” touch for a thinner display profile. As the 4.7-inch display is smaller than 5.5-inch display, it will be cheaper to produce and help maintain average selling prices for the device, enabling Apple to maintain competitive pricing in the market.

Going with a 4.7-inch display would also allow Apple to maintain one-handed use of the phone, which was a factor in the design of the 4-inch display in the iPhone 5, 5s, and 5c. This leads IHS to believe that a 4.7-inch display will make its appearance before a 5.5-inch version in the next generation of the iPhone in 2014.

Weighing the alternative

The strategy of a smaller display makes sense by eliminating additional pressure likely to come about if Apple were to release both sizes at the same time. Such a move would mean that the display supply chain will have to ramp up capacity to reach appropriate yields and volumes for both of the larger-sized displays. And in order to maintain Apple’s premium specifications with higher resolutions, a considerable amount of time would be needed.

If Apple were to move the other way and choose a 5.5-inch display before, or at the same time as, the 4.7-inch, that would also likely change the dynamics of the market. It could further increase the growth of displays in the phablet category as other players likely mimic Apple’s move in an effort to stay competitive, necessitating an increase in the forecast for larger displays.

To secure its footing in the market for larger-sized displays, Apple has purportedly made other moves, and news is circulating of the company building a new component manufacturing facility in Arizona. Among the equipment and material investments Apple has made for the new plant are those announced in an agreement with GT Advanced Technologies. GTAT will apparently supply the new plant with sapphire glass, a rugged scratch-resistant glass material, to be used in Apple’s products.

Apple first utilized sapphire materials on the camera lens of its iPhone 5 in 2012, and now also uses sapphire glass in the fingerprint-sensing home button of the iPhone 5s. Sapphire’s higher cost in comparison to other glass materials has made it an expensive option for a cover glass. However, a cover glass using sapphire materials, at least partially, could be possible with this investment.

This is because the material will further enable Apple to differentiate its iPhone product line with scratch-resistant surfaces from other smartphones, while also increasing the ruggedness of Apple products and at the same time contributing to the growth of sapphire materials.

Read more >> IHS Display Materials & Systems service

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