Will Apple Inc.s iPhone 6s Feature Qualcomm Inc.s Speedy MDM9x35 Modem?

By Markets Fool.com

Those who follow Apple know the company has tended notto use Qualcomm's latest cellular basebands; it has instead recently stayed a generation behind what other handset vendors have used, and it has usually stuck with a given baseband for two generations. I believe Apple has done this for cost purposes, although othergood technical and business reasons might also come into play.

Continue Reading Below

In that vein, willApple remain true to form for the next-generation iPhone 6s and stick with the category 4 LTE-Advanced baseband (MDM9625) found inside the iPhone 6/6 Plus, or will it upgrade to the MDM9x35 category 6 LTE-Advanced baseband?

The benefits to going with the MDM9x35
Some investors believe Apple will have a tough act to follow with next year's iPhone release. This year, the company brought some very nice improvements to the handset, along with, more importantly, nicer, larger displays. The value proposition Apple is delivering looks quite good, as analyst reports generallypoint to strong iPhone demand.

While I don't expect Apple to go overboard on the specification side of things, I would not be surprised if the company hastens the pace at which it implements new hardware technologies in cellular baseband, connectivity, and other areas.

By implementing the MDM9x35 in next year's iPhone, Apple could claim a twofold improvement in peak LTE speeds over the iPhone 6 and 6 Plus. The 20-nanometer manufacturing technology upon which the MDM9x35 is built would also bring efficiency, and thus battery life, improvements.

It's not clear how important this is to consumers, but barring a major user experience breakthrough elsewhere (such as Touch ID on the iPhone 5s or the larger screens and near-field communication in the iPhone 6), Apple might have to start pushing harder on these technologies to keep people upgrading.

Continue Reading Below

The downside to doing so
The downside to Apple adopting this next-generation modem (which should actually be a generation behind Qualcomm's latest by the time the new phone launches) is simply that costs likely go up relative to what Apple is using today -- potentially impacting gross profit margin per unit.

If Apple won't generate incremental sales by moving to this new modem, it probably doesn't make sense to pay a premium for it (although it is hard to know what impact a particular feature will have on sales).

Consider the competitive landscape
By next year, many of Qualcomm's customers will either be using the stand-alone MDM9x35 with category 6 support, or the integrated Snapdragon 808/810 processors with category 6/9 support. This means the Android flagships Apple will be competing against will offer peak cellular data speeds of 450 megabits per second.

Additionally, Intel , which has its own category 6 LTE-Advanced solution, also claims it will ramp up sales of that product aggressively during 2015. Furthermore, both Qualcomm and Intel have signaled their intent later in 2015 to move to category 10 LTE-Advanced speeds (450 Mbps download/100 Mbps upload) with new modem chips.

The difference between the category 3 (100 Mbps download) LTE found inside the iPhone 5s and the category 4 (150 Mbps download) found in many of the iPhone 5s' contemporaries wasn't all that noteworthy; the difference between category 6/9 (300/450 Mbps download) and category 4 (150 Mbps download) will actually look quite large on paper.

As a result, I expect Apple will move to the MDM9x35 in the next-generation iPhone. This won't be a bleeding-edge modem (the MDM9x45 will likely hold that title when iPhone 6s is launched), but it would be a big enough jump from the iPhone 6, and close enough to the very latest, that it should be competitive without breaking the bank.

The article Will Apple Inc.s iPhone 6s Feature Qualcomm Inc.s Speedy MDM9x35 Modem? originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel and Qualcomm. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.