In 2017, Apple (NASDAQ: AAPL) disappointed some iPhone enthusiasts by releasing its hotly anticipated iPhone X in a single screen size -- 5.85 inches along the diagonal. For many potential iPhone users, such a large screen in a device that's not that much larger than the standard iPhone 8 (4.7 inches) is a clear selling point. Just look at how well the iPhone X seems to be selling relative to the iPhone 8 and iPhone 8 Plus despite the high price.
However, other iPhone and, more generally, smartphone enthusiasts want devices with even larger screens than the one found on the iPhone X.
It's not hard to understand the value proposition of smartphones with jumbo-sized displays: Larger screens, at a minimum, make it easier to interact with the content on the device. In addition, larger screens afford smartphone manufacturers the opportunity to add useful software features that simply wouldn't be feasible -- or, at least, a good user experience -- on smaller screen displays.
Next year, Apple is expected to release an upgraded version of this year's iPhone X as well as a larger version of that upgraded model with a 6.46-inch display.
Here's why I think that phone could be a huge seller for Apple.
A proven market
Apple's biggest rival, Samsung (NASDAQOTH: SSNLF), released two versions of its flagship Galaxy S8-series smartphones in early 2017 -- the Galaxy S8 and the Galaxy S8+. The Galaxy S8 sports a 5.8-inch display, while the Galaxy S8+ has a 6.2-inch display. This, unsurprisingly, is exactly the playbook that Apple is expected to follow with its next-generation iPhone X smartphones.
Back in April, shortly after Samsung launched the S8 and S8+ devices, Samsung officials reportedly said the majority of buyers were selecting the Galaxy S8+. It's also worth noting that the phones were, aside from the screen size difference, identical. Customers were willing to pay an extra $130 or so simply for a larger screen.
The situation with next year's iPhone X and, presumably, iPhone X Plus, could be slightly different. For example, if Apple prices the successor to the iPhone X at $999, then that'd put the starting price of the iPhone X Plus at $1,099 -- or possibly higher. Such a price tag could impede demand for the larger-screen iPhone X Plus relative to that of the next-generation iPhone X.
Nevertheless, I think Apple can look forward to a large percentage of new iPhone buyers opting for the iPhone X Plus next year. I also think a lot of folks who held off on buying the iPhone X this year because it was too small will finally hop aboard the iPhone X train next year, which could have the effect of pushing iPhone unit shipments, and therefore revenue, up year over year.
Apple's potential mistake
Analyst Ming-Chi Kuo with KGI Securities claimed there wouldn't be significant differences in hardware specifications between next year's iPhone X successor and its larger-screen sibling -- the screen size and pixel density, which affects how sharp the display looks, appear to be the main points of differentiation.
I think that would be a mistake.
Apple's larger-screen iPhones -- the "Plus" versions of its iPhones -- have continued to gain traction over the product generations. That hasn't come about purely by chance. Consumers seem to be gravitating toward larger-screen devices, but beginning with the iPhone 7 generation, Apple began endowing the Plus-series smartphones with additional features that the standard-sized models simply don't have.
The iPhone 7 Plus had a dual-lens camera that was capable of optical zoom and a nifty "portrait mode" feature, while the iPhone 7 was limited to a single lens. The iPhone 8 Plus retained the dual-lens camera advantage over the iPhone 8.
Since it's been proved in the marketplace that customers will buy larger, pricier iPhones if they're endowed with unique features, it only makes sense for Apple to include unique features in next year's iPhone X Plus. If it doesn't, then Apple is simply leaving money on the table.
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Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.