Piper Jaffray’s Gene Munster, thinks the rumoured new low-end iPhone with a smaller screen won’t really mean much for Apple, even though there seems to be fairly strong demand from existing smartphone users.
In a note published Friday, Munster wrote his data indicates Apple may indeed be working on a new 4-inch device for launch next year, confirming some of the previous reports about the smaller iPhone model, called the 6C, rumoured to be in the making.
The same note also shared an internal survey by Piper Jaffray that revealed over 20% of smartphone users saying a 4-inch screen size is the optimal size for smartphones. The iPhone 5S had a 4-inch screen, while the 6 and 6-Plus each come with a 4.7-inch and 5.5-inch screen, respectively.
But Munster laid out the following three reasons for why he thinks a smaller iPhone won’t really help Apple in any meaningful way:
- Consumers don’t really want smaller devices: Munster writes that the 20% smartphone users who said they prefer 4-inch screens are simply saying that because they’re still using the older iPhone models. He believes once they upgrade to a 4.7-inch model, they will realise its actual footprint in the pocket won’t change as much. In fact, 58.4% of the internal survey respondents picked either the larger 6 or 6 Plus models as their preferred screen size.
- People don’t care about colour variety: Munster says the main feature of the 5C, the iPhone’s last low-end model, was its colour variety. But that turned out to be “undesirable for most consumers,” because a lot of them use cases on their phones. The only big factor that could drive the sales of the 6C would be its smaller size, which he believes is a non-factor.
- It actually won’t be cheap: Previous reports about the 6C noted that it would not only be smaller, but also cheaper, princing at around $450 a device. But Munster notes that Apple’s standards are too high to drop the price that low, and doing so would be a “change in [Apple’s] philosophy.” The 5C was initially priced at $549.
He concluded, “The reality is that whether the device is real or not doesn’t matter. We would not expect Apple to sell significantly more iPhone 6C devices than the typical low-end model (currently the 5S) and would also not expect margins to be significantly different.”
KGI’s Ming-Chi Kuo, a top Apple analyst, wrote on Thursday that a smaller iPhone model may come with some of the same components as the 6S models, including the A9 processor. He wrote it could be priced in the $400 to $500 range, targeting emerging markets and smaller budget customers.
Kuo’s prediction comes just a month after a report by Credit Suisse that said Apple may be working on a low-end iPhone with a smaller screen size. Credit Suisse, however, noted that the new low-end iPhone could incrementally help Apple’s business because it would basically add much more variety to Apple’s iPhone portfolio.
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