Apple's push for bigger iPhone screens expected to drive services profits

The increased costs of making larger displays is small compared to the extra revenues they will bring by driving greater use of the iPhone and tailoring to Apple's forthcoming video services, according to a new analysis.

Apple's "Gather round" event is expected to see the company step up the screen size in two of its three new iPhones by an average of 23 percent compared to last year. According to the Wall Street Journal (article requires subscription), this increase in size will boost initial sales and then also increase owners' use of the phones.

The replacement for last year's iPhone X is expected to retain that phone's 5.8 inch display. However, the replacement for the iPhone 8 is believed to be increasing its screen to 6.1 inches and there's to be a Plus-sized version at 6.5 inches.

Phone size comparison, by Wall Street Journal

"The bigger the device, the more people are getting out of it," analyst Jennifer Chan of research firm Kantar Worldpanel told the Journal. "And the more opportunity there is for Apple to generate money from them."

Kantar Worldpanel claims that users with smartphone screens 6 inches or larger typically use twice as many apps as those with 5.5 inch screens..

The Journal says that it costs Apple $33 more to make Plus-sized models of the iPhone and that the company then charges $100 extra. "As a result, Apple pocketed nearly $77 more profit from the iPhone 8 Plus [than the iPhone 8]," says journalist Tripp Mickle.

Analyst Carolina Milanesi, previously of Kantar and now with research firm Creative Strategies, told the Wall Street Journal that: "The larger screen is not just about real estate. It's a much broader play that benefits the Apple ecosystem."

Milanesi believes the bigger screens make watching TV shows and films more appealing and so expects this to help with Apple's video streaming plans.

Currently there are 1.3 billion iPhones is use and Apple earns an average $30 per device annually from services such as Apple Music, according to estimates by Morgan Stanley.

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11 Comments

Hondamaker 7 comments · 8 Years

About 6 years ago

Dude, $100 minus $33 is a $67, not nearly $77. Just sayin'.

cropr 1142 comments · 11 Years

AppleInsider said:

Kantar Worldpanel claims that users with smartphone screens 6 inches or larger typically use twice as many apps as those with 5.5 inch screens..

The question is: Have users, who are using a lot of apps, already chosen for a big screen or are bigger screens the driver for more app usage? I am inclined to believe the former is correct. Meaning that pushing users who are currently using less apps than average to a bigger screen, won't necessarily make them use more apps.

dewme 5737 comments · 10 Years

I’m all in on bigger screens but Apple (especially) and most app developers need to make better use of the bigger screens. The Plus phones do make some reasonable accommodations in landscape orientation. The iPad is the worst offender in not taking advantage of the massive screen it has.

nunzy 662 comments · 6 Years

Apple did extensive testing and determined that the 3.5 inch screen was the optimal size. Samsung made screens the size of dinner plates that made Android fanboys look ridiculous. Apple knew better and kept the optimal screen size that they knew was the best.

What happened?

lorin schultz 2744 comments · 10 Years

nunzy said:

Apple did extensive testing and determined that the 3.5 inch screen was the optimal size. Samsung made screens the size of dinner plates that made Android fanboys look ridiculous. Apple knew better and kept the optimal screen size that they knew was the best.

What happened?

Things changed over the ten years since then. Component costs, usage patterns, and user preferences.

I'll bet part of the "optimal" equation was the cost of larger screens making them less attractive to buyers not yet familiar with the concept of a touchscreen pocket computer that makes phone calls.

What buyers would most readily accept would also form part of the "optimal" assessment. In a world full of flip phones, consumers would have freaked out at the notion of something the size of an iPhone Plus because at that point they had no idea how they would benefit from the extra size. And there wasn't as much benefit then as there is now, as applications for the category hadn't yet evolved to exploit it. They have now, which further alters the "optimum" equation.

I'm sure it's frustrating for those who prefer a smaller device, but the fact that 3.5 inches was optimal back then does not mean it still is.