Barclays Expects 5” iPhablet Late 2013, Early 2014

| Apple Stock Watch

iPhablet MockupBrute-Force Mockup of an iPhablet

Barclays analyst Ben Reitzes told his clients on Monday to expect Apple to release a 5-inch iPhone—or iPhablet—in either the last quarter of 2013 or the first quarter of 2014. He said that the form factor is popular enough that Apple will not be able to ignore it.

In the research not obtained by The Mac Observer, Mr. Reitzes wrote that, "Apple has stood firm that its iPhone is ideal for one-handed use, which is true in our opinion. However, one handed use is arguably less important as phone calls become less and less crucial - the larger form factor has caught on for navigation, texting, videos, books and web access."

The analyst makes a great point, and he added that, "the larger screen seems to be more popular outside of the US and the phablet has significant momentum in China."

Apple has identified China as a market that will grow larger even than Apple's enormous market in the U.S. If Chinese consumers think that larger devices are the bee's knees [蜜蜂的膝蓋], you can be sure that Apple has taken that into account when CEO Tim Cook made his statement about the Chinese market.

Mr. Reitzes also noted that the broader global tech team at Barclays believes that the 5-inch smartphone market will grow from 27 million units in 2012 to 230 million units in 2015, with growth outpacing the growth of the overall smartphone market. He believes Apple could grab 20 percent of that market.

So what's ahead for 2013? The analyst said that this year will see Apple focusing on improving services and iOS. He believes that Apple will be able to expand its market with such improvements.

"We believe Apple can turn perceptions around with a real move into payments, an integrated iOS-led television service and improvements to iCloud (including subscription-based services)," Mr. Reitzes wrote.

He added, "These services must be powerful enough to 'allow' Apple to 'sit out' the 5-inch phone market for most of the year without significant share loss."

Part of that formula is the reality that Apple's App Store has some 800,000 apps, and that much more money flows through the App Store than through Google Play or other competing markets. That keeps developers investing in iOS apps, which helps make iPhone, "arguably the most useful phone in the market."

Raising a point thatTMO's staff has had on its collective mind of late, Mr. Reitzes noted the exceedingly disproportionate amount of usage the iPhone has compared to market share leader Android.

"For example," he wrote, "according the NetMarketShare.com, the iOS operating system was responsible for over 60 percent of mobile internet activity for NetMarketShare.com’s partner websites while Android represented almost 25 percent."

Mr. Reitzes maintained his "Overweight" rating (the equivalent of a "Buy") and a $575 price target.

AAPL closed on Monday at $442.316, a loss of $11.304 (-2.49 percent), on light volume of 17 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

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20 Comments Leave Your Own

paikinho

Sorry, I just don’t want something that big period.
I used to have a Handspring Visor phone and that was too big and it is smaller that these 5” slabs.
I don’t really get why people want to hold up a giant thing to their face.

For me an even smaller form factor would be welcomed. Why do analysts always try to push for things that are to me unappealing.

Gary

Just for the record…a mock-up isn’t just taking an image of an iPhone 4 and stretching it horizontally. WEAK!

Bryan Chaffin

Hence the “brute force” label, Gary. It wasn’t intended to be serious.

paikinho

I thought the image was fitting given that it seems a ‘stretch’ that Apple will produce a 5” iPhone.

Who wants to waste time doing a mock-up, when the absurd image is so readily available.

diverreb

Let’s make the iPad smaller, let’s make the iPhone bigger, let’s make the bigger iPhone a little bigger, lets add more memory to the iPad…..  How about a screen that is a little clearer than the previous screen…..  True innovation….  Let’s see if the stock price can be made a little smaller….  Just keep the same formula going and Apple will be back in the $250 - $350 range….  Or lower.  How about doubling or tripling Battery Life….  How about something revolutionary, not evolutionary?  The rest of the world is catching up and maybe even surpassing Apple….  They clearly aren’t what they used to be….

paikinho

Since when did apple do anything revolutionary?
I really can’t think of anything revolutionary.

Even the Mac was just copied.
The iPod was just their version of an MP3 player. My PJBox has better sound to this day.
The iPhone was a snazzy version of the smartphones that already existed.
Nothing revolutionary in any of these.
Apple was built on really cool evolutionary.

The stock won’t go much lower, because the company is making so much money successfully doing what they always do. It is analysts like this Barclays putz who seem to think that Apple needs to do something else besides making the most profits of any company in history.

Double the battery life? Heck… none of the other companies can equal the battery life of apple products already. Apple doesn’t invent the batteries that go in its devices. Battery companies do that.

Apple is exactly what they used to be. I think you have bit off too much of the crazy avalanche of negativity about the reality of what Apple is and their strategy for maximizing their profits. On this one, it is the expectations of the analysts that seems to be deranged… not apple.

Apple clearly isn’t what they used to be…. they are much more profitable. And this increase in profitability is still increasing for at least another few years.

diverreb

Let’s start with the iPod….  MP3 players were already in existence.  Apple Revolutionized the player by creating designs that didn’t exist and tied that in with a system that was Revolutionary in it’s simplicity and locked in most of the major labels with an unheard of way to go to Market with single songs at .99 each.  Totally revolutionary.  The continued that product line by being innovative and doing more than making them a little bigger or a little smaller.  Next was the iPhone…  Again Revolutionary in it’s design and engineering, along with it’s App model.  Following it’s iTunes success it blew the competitors out of the water.  It continued to add features of note like Cameras then added memory, better cameras, higher screen resolution, faster speeds, all enough to generate immediate upgrades.  Then cme the iPad…..  Again there were tablets out there, but the design and feature sets along with the tie in to iTunes and the iPhone IOS made it a winner.  Each new product had a a few tricks left out that kept the faithful, myself included, drooling for the next generation that added enough new features that made the upgrades worth the purchase.  The first iPad was thick and clunky and lacked a lot of features we all wanted.  The next generation was significantly thinner and added features that created value.  Revolutionary followed by meaningful value creating evolution.  That latest iterations have done nothing of the sort and it seems the future is more of the same.  Jobs had vision that we all knew drove the Product Development.  Tim Cook is no Steve Jobs and the lack of vision is and will continue to make Apple another Sony, if they don’t change course…..  They need Revolution or at the very least evolution that will bring about the next best thing, whatever that is.

mex

@dilerreb
Even the design of everything that Apple made , was copy . Just google it.

paikinho

I think we have a divergent view of syntax.

Creating something that is more appealing to customers isn’t revolutionary.

Creating something called the transistor is revolutionary or coming up with PCR tech is revolutionary.

Making something that already exists is simply evolving a product.

It may be much cooler than the products which have come before, but that is all.
Nothing revolutionary… just moving the ball forward.

iJack

“Since when did apple do anything revolutionary?”

Excuse me, but did anyone here claim they had?

Bryan Chaffin

That’s a great point, iJack. No one had.

I will now, though. Apple has revolutionized the computing industry twice, publishing, printing, the media player industry, the music industry, mobile phones/smartphones, software distribution, and it invented the touch tablet market. Throw in supply chain management, too. And that’s without thinking about it all that hard. smile

Feel free to substitute “disrupted” for “revolutionized,” but I think in this context they’re synonymous.

Certainly offering a 5” device will be neither revolutionary nor disruptive.

What will be both will be is when Apple kicks mobile payments into something more than a niche concept. The same could be true with fingerprint security, but I think that will “merely” be additive, rather than disruptive.

On, and we’re early in the process of Apple disrupting search with Siri, but there is much still to unfold in that category.

Those last couple of bullet points are surely debatable. The first group is not.

paikinho

iJack:
I think diverreb was trying too say something about apple in the context of revolutionary.

First diverreb said:
“How about doubling or tripling Battery Life….  How about something revolutionary, not evolutionary?  The rest of the world is catching up and maybe even surpassing Apple….  They clearly aren’t what they used to be….”

My response to that was the quote in your response.

Why is diverreb wanting Apple to be something they never have been and saying they aren’t what they used to be? Was my basic question.

Next diverreb went on a lengthier discussion:
“...Apple Revolutionized the (mp3) player by creating designs that didn’t exist and tied that in with a system that was Revolutionary in it’s simplicity”

“Next was the iPhone…  Again Revolutionary in it’s design and engineering, along with it’s App model.”
etc.

I think diverreb was trying to say the launches of the iPod and the iPhone were revolutionary…. but goes on to reason that after the initial launch the releases were mere evolutions of the products. More pedestrian.

I just disagree that the iPod or the iPhone were revolutionary. We have a syntactical dispute is all.

paikinho

Bryan:
Mobile payments will be a great thing, but this too already exists. It is not a major factor for most people at this time. Once Apple decides what it will do with mobile payments the die will be cast, mobile payments will become pervasive, but that is not really what I would call revolutionary. It is more like the a big standard will be out there that will make it more widespread and the entire world will think that it is finally ok and will give it a go.

Sure Apple will jump in and all the other companies will react, but is that really revolutionary? Is that Apple being revolutionary? Or is it like most things Apple has done… just make a better, more consumer friendly version which outdoes the scattered, feeble, and non-pervasive things other companies are already trying to do?

It reminds me of the japanese. The didn’t invent the TV, but they sure evolved it and innovated the TV. They made TV’s people wanted to buy.
—————-
Respectfully you Say the first group is not debateable, but of course it is.
[Let me first preface this with I am not an apple basher, and I love my apple products and apple stock]
I do not agree that Apple is particularly revolutionary in its products. It just does a much better job with their products than other competitors and they have been rewarded rightly for their efforts with huge profits.

Computers:
What is particularly revolutionary about Apples machines?
The Apple2 wasn’t particularly ground breaking except that Jobs figured if he made a computer in a certain way he could sell a lot of them and make a lot of money. Machines that could do the same things were already out there, but Steve had better vision about it all.
Apples Mac computers weren’t revolutionary ... they were copied from Xerox-Parc.
The current macs are just a friendlier version of Unix with a better GUI than x-windows. Their design is the best in the world. But so is ferrari’s design better than a pontiac. I would love some elaboration on how you feel Apple has revolutionized the computer.

Publishing and Printing:
How do you see Apples publishing and printing being revolutionary?
What facets of publishing and printing did apple revolutionize given that digitizing media has been around since at least the 70’s. I’m sure Apple helped move the ball along, but many other companies in the Digital age added to the process we now have. Apple wasn’t a sole player or even the innovator in much of what has transformed our world from paper to digital.

Music Players:
Apple came late to the game, but made a nice product and enticed everyone wanted to buy one. Their player was pretty nice compared to other players and better for the average user. This is usually considered more a refinement of a product that a revolutionary product. They saw a market that was not saturated and leveraged their better design to excite consumers.

Music Industry:
Napster was what led the revolution. Even though it wasn’t legal and eventually was shut down. The “True” digital music revolution started there. Apple just created a more gentile and legal framework to do the same kind of thing after the recording industry had their pants pulled down. Napster was the clarion call, ... the symbolic dead canary in the mineshaft that signaled that changes were afoot.

Smartphones:
My first smartphone was a Handspring visor I picked up in 1999. You could download apps, text, call, use it as a sort of primitive computer. It did all kinds of fantastic things that people take for granted now. Apple made a really nicer phone with much more advance technology nearly a decade later and their design was inspiring. They were able to assemble the technology of the day into something that made the phone industry stand up and notice, but still their phone was a product of evolution and one of leveraging the current tech for the maximum impact.

Software Distribution:
Since the mid-90’s Linux has been using the app repository mechanism for installing and managing software. I could freely select download and install thousands of apps from source or binaries and update my machines. Once I was using Debian based versions of Linux I used a lot of APT get to download everything I needed from a few repositories. apt get was basically the command-line version of clicking the button to install an app. What apple did was create a snazzy, user friendly, and monetized version. The app store is great, but not particularly new. They just took an already great idea and helped their bottom line by allowing users to feel good about the model.

Supply chain management:
Apple has become great and very efficient at it, but this really is nothing new. I’m sure everybody learned a bunch from Walmarts monster supply system including Apple. None of this stuff is done in a vacuum.
.....cont below….

paikinho

None of this stuff is revolutionary… it is all evolution of paradigms which already exist. The thing Apple has been able to do… the magic really is that they seem to know how to transform things into highly lucrative ventures. Other companies are just not as good at it and up to this point, Apple has been able to stay in the sweet spot of making enough product people want to buy and coming up with other ways like the retail stores and the app stores which are also engines that help the machine continue turning profits.

Apple is innovative, creative, they can do more with the technology of the day than other companies seem to be able to muster. They seem to see angles on things that already exist and turn them into blockbuster revenue streams.
In the end I still think we are at a syntactical impasse. Definitions and language are difficult things to sort out between people because everyone has their own experiences and this impacts what words and ideas mean to them.

Anyhow. I really appreciate the work you do Brian. I concur with you on most of the articles you have been writing in calling out the doomers and gloomers about Apple underperforming and being disappointing when they are making record profits and sales. I’m glad the stock is down so I can afford more.

Bryan Chaffin

I see your point, paikinho, and I appreciate the dialog. I just see the idea of taking something—even a category that exists in some fashion—and making it viable, or even better, wildly successful, as far more than evolutionary, especially when that process includes re-engineering it from the ground up.

Each iteration of the iPhone has been evolutionary. Certainly. The iPhone was revolutionary. Each new release of iTunes has been evolutionary (sometimes de-evolutionary!!), but the original iTunes Store—or Apple Music Store as it was known for about a day and a half—was revolutionary.

Same with the iPod, iPad, App Store, etc.

Personally, I think this is beyond question, but I am totally OK with anyone who thinks differently. smile

And thanks for the compliments.

paikinho

I see where you are coming from. I guess it is kind of a chicken and egg thing. and as such any debate probably is silly. But I will pose this question and give you my thoughts if you will indulge for a bit. I appreciate you feedback.

Do you think the Original IBM PC was revolutionary?

We all know IBM dominated the market, but my view of the IBM PC is not one of a revolutionary product but of a simple product which became the mechanism which carried the changing of our world for a couple decades. The revolution was already underway and the PC just happened to be the computer that won out and moved things forward. “The PC” could have been any one of many computers to have completed the ‘computer revolution’. The PC won the marketing war, but was inferior to a lot of offerings by Apple, Commodore, and Atari.

I believe that, at that point the PC came about, the revolution was already underway and the world was poised to move in the direction it moved even if neither Apple nor IBM was involved. The PC was a product that was ok for its day. Nothing spectacular. (My Atari 800 was far more interesting even though it was older.) In the end, IBM just hammered everyone.

For me, making a lot of money or even selling a lot of product isn’t what makes a product revolutionary. Companies are geared to make product which will make lots of money and mostly companies borrow ideas that are already out there and try to improve upon them.

What is revolutionary is the initial idea… the nidus which starts it all.  The idea that shows the path to follow. I don’t see such nidus’ coming from Apple.

An example of what I mean is computer game revolution. In my view the revolution came with the creation of “computer space”. Pong made computer gaming pervasive, but that was just one of many and pong happened to catch on and become wildly popular. Some game or other was going to popularize computer gaming. But, as fate would have it,  probably the most boring game on the planet was the one that oddly made computer gaming popular.

In the end I suppose I see your point about things being revolutionary when the masses finally carry things forward. Apple is certainly creative and adept at making things that people want to use and want to buy. Their ability come up with slick products that competitors are forced to copy to stay relevant is amazing. They should be able to maintain their current success for 3-6 more years even without something dramatically new. But at some point a new paradigm will come along and I’m pretty sure Apple will be able to leverage their position and cash to come up with a version that stands tallest among the what-cha-ma-thingies of the future.
cheers and take care

Bryan Chaffin

Great question about the PC. My gut reaction was “Heck no,” but a more considered response is far more nuanced.

The IBM PC itself was de-evolutionary, but Bill Gates’s decision to license the OS was revolutionary. It was certainly disruptive. It eventually upended every proprietary whole widget company in the business except for Apple, and it almost succeeded there, too! That’s amazing, when you get right down to it. I’d argue that it also resulted in retarding the industry for almost 20 years, but that’s another discussion.

There is a difference between Microsoft’s revolution and Apple’s, however. Apple has tackled nascent industries that seem like a good idea, but no one can get it right. Apple then figures out how to do it right, identifies key technology(ies) it can own, and then disrupts the crap out of everyone else.

For the PC, Apple and Commodore were already doing it right and had large businesses of their own. The Apple II was massively disruptive for existing hardware companies (like IBM), and Commodore had figured out how to make something really cheap that people could play around with. What IBM and Microsoft did with the IBM PC was to take what the other guys were already doing, add batch processing for businesses, and leverage IBM’s brand to get businesses to adopt it en masse.

They didn’t really change anything except to choose to use an inferior processor that made the whole thing cheap.

So again, it ended up being MS’s open licensing that was disruptive and revolutionary.

IMNHO, of course. smile

paikinho

My knee jerk response would be to assume the PC industry retarded the industry as a hole, but during that time there was an explosion of improvements that changed computers and computing. Our society was transformed rapidly and I am not certain that the pace could have been greater. The gift of the PC was it its standardization. I think its modularity helped as well since 3rd parties could really add function.

Sinclair Lewis in his book Babbitt so aptly put it thus:
“Standardization is excellent, per se. When I buy an Ingersoll watch or a Ford, I get a better tool for less money, and I know precisely what I’m getting, and that leaves me more time and energy to be individual in.”

The PC was a mundane chunk of computer, but because of that individual creativity in computing blossomed.

As to Microsofts open licensing, I am not so certain as to its disruptive power in the way you suggest. Once more I think of it as an inferior product getting a big footprint to get leverage.
I could put various OS’s on my Atari as I remember many were much nicer than what microsofts DOS was. What Microsoft seemed to do was to get the biggest footprint by licensing their OS to IBM. Once that threshold was reached, it became a self selling item. No further marketing was required, since as the OS is a fundamental tool, once there is a really big footprint… in order to carry on business with clients and other businesses one needed compatibility.
The need for compatibility is what drove adoption of Microsoft in the end. That is why Microsofts offerings still have the biggest footprint.

I completely concur with your assessment of Apples ability to this point to identify up and coming areas they can exploit to make really good products.
I don’t really see this ability as impeded as of yet despite the analyst echo chamber. I think Tim Cook has done a good job thus far in his guidance of the Company. He has more than adequately handled the product transitions with the exception being Maps…. but that again I feel is largely due to unrealistic expectations by analysts and a lack of understanding of the need to move to Maps by the public. I also think Cook has taken care of some other aspects of Apple which were being neglected. He has made lots of improvements and nobody seems to get this. Oh well.

But I only expect the negative press to keep on going until Apple successfully launches an new product wing. Then maybe some of these folks will simmer down and focus on real numbers. Once Cook can steer the company into another big thing people will stop saying Cook is no Jobs. Of course he isn’t but does that me Apple can’t be successful? I especially liked John Sculley putting his 2 cents in on what he thinks Apple needs to do.

Anyhow, to paraphrase what you said in one of your previous articles….‘nobody else has come up with anything new yet either so why hold apple to a higher standard’

iJack

“I think we have a divergent view of syntax.”

“We have a syntactical dispute is all.”

“In the end I still think we are at a syntactical impasse.”

paikinho ~ We probably have a dispute over meaning, but I see no dispute over ‘syntax,’ which is obviously a word you love, but don’t seem to understand.  The OED defines ‘syntax’ as the arrangement of words and phrases to create well-formed sentences in a language, but does not reference the meaning of the words.  I think most of the sentences here are pretty well-formed.

We may also have a misunderstanding of the word ‘revolutionary,’ which the source defines as involving or causing a complete or dramatic change: ‘a revolutionary new drug.’  By that meaning, Apple have indeed introduced many revolutionary products and services, and Bryan has done a fine job of listing some of them, although I would have put OS X – Unix with a GUI – on the list, and near the top.

Henry Ford did not invent the automobile, nor the production of them as a product – not even close.  That distinction would probably go to Karl Benz, in about 1888.  However Ford did introduce revolutionary production methods, marketing, accessibility, etc., to the product.  The irony of this example is that most of us would consider the Mac, OS X, and iDevices, as the Mercedes-Benzes of their respective product classes.

mrmwebmax

+

paikinho, using your line of reasoning, anything can be considered simply evolutionary and not revolutionary. For example, iJack mentions Karl Benz and Henry Ford in regard to the automobile. Many would consider the automobile revolutionary. But I could just as easily say, “It was merely evolutionary. All they did was take a horse-and-buggy—already invented—and replace the horse with an internal combustion engine—also already invented.”

As for Apple, the Mac was truly revolutionary. Not just a “copy” of Xerox PARC’s work with GUIs and mice, the Mac brought those technologies to a consumer computer, added proportional fonts, and gave birth to desktop publishing. How can anyone not consider desktop publishing a true revolution? Yes, digital publishing was around before the Mac, but typesetting machines were huge, people still relied on actually physically cutting and pasting onto layout boards, and the idea of going directly from an on-screen layout to a printing plate wasn’t even in the cards. Trust me, I remember those pre-Mac days, working on high school newspapers. The Mac, the LaserWriter, and Aldus PageMaker changed all of that in a way that can only be called revolutionary.

Af for Napster vs. iTunes: What iTunes did that was revolutionary was to completely revolutionize the entire business of the music industry. That’s something Napster didn’t do. All Napster did was create a way for people to download MP3 files. Did Napster invent the MP3? Did Napster invent the Internet? Did Napster invent downloading? Did Napster invent stealing, or people’s desire to get things for free? Did Napster invent music? So how were they revolutionary in any way?

The iPhone was revolutionary. All you have to do is look at smartphones before the iPhone, and smartphones after the iPhone. No, Apple didn’t invent the phone, but hey, the phone wasn’t revolutionary, just an evolution of the telegraph, right? I digress. MultiTough, pinch to zoom, app stores, all the things all smartphone owners take for granted now came from Apple. I’d call that pretty revolutionary.

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