New 6.1-Inch iPhone Could Be Apple’s Most Important Device Since iPhone 6

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Apple’s (NASDAQ:AAPL) iPhone line-up looks set for a big refresh this fall, with the company expected to launch three new devices. While Apple is likely to introduce the second generation 5.8 inch iPhone X and a plus-sized version of the iPhone X, the company is also expected to launch a more affordable 6.1-inch all-screen LCD-based device, which we believe could be the most important new iPhone since the iPhone 6. Below we take a look at some reasons why that may be the case.

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Demand For A Fresh Looking iPhone At An Accessible Price Point

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The iPhone’s form factor and design play a significant role in driving sales, as more customers feel compelled to upgrade when the company launches a fresh looking device. Apple saw its last major upgrade cycle in FY’15 (financial year ends in September) driven by the iPhone 6, which featured larger displays, with shipments soaring by almost 37% year-over-year.  However, the basic design for the iPhone remained the same over the next two years, with shipments declining in FY’16 while growing by just 2% in FY’17. Although Apple launched the completely overhauled iPhone X in late 2017, the device hasn’t set off a major upgrade cycle considering its $1,000 price point, and we expect FY’18 iPhone shipments to only see low single-digit growth levels. However, a new 6.1 inch iPhone could drive a major upgrade cycle for Apple, considering that it is expected to offer iPhone X’s signature edge-to-edge display and potentially the FaceID biometric system, which could entice users of older devices to upgrade to a fresh looking phone without having to spend on a more expensive iPhone X.

The Device Could Be Quite Lucrative

While reports indicate that the all-new device could start from as low as $600, we expect that it will be priced closer to the iPhone 8 and 8 Plus, which start at $700 and $800, respectively. This is because Apple hasn’t had trouble selling devices at these price points, as the 8 Plus was its best selling handset in the U.S last quarter. Apple may also be able to keep margins on the new iPhone thick, as it is expected to eschew some costly features, including the OLED screens that it has had trouble procuring in favor of more widely available (and economical) LCD panels. The device is also unlikely to offer the 3D touch pressure-sensitive display that has been a staple of most iPhones launched since 2015, while only sporting a single camera, as opposed to the dual rear camera setup on the current iPhone X and 8 Plus models.  At the same time, product differentiation would also be reasonably strong for the iPhone X models (which should be priced at a ~$200 premium), as they could cater to users seeking cutting-edge camera and display technology.

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