Apple considers more iPhones and price points

Apple is exploring launching iPhones with bigger screens, as well as cheaper models in a range of colors over the next year taking a cue from rival Samsung Electronics, say four sources with knowledge of the matter.

The moves, which are still under discussion, underscore how the California-based company that once ruled the smartphone market is increasingly under threat from its aggressive Korean competitor. Samsung has overtaken Apple in market share through the popularity of its bigger-screen Galaxy “phablets” and by flooding the market with a range of products at different prices.

Apple is looking at introducing at least two bigger iPhones next year - one with a 4.7-inch screen and one with a 5.7-inch screen - said the sources, including those in the supply chain in Asia. They said suppliers have been approached with plans for the larger screens, but noted it is still unclear whether Apple will actually launch its flagship product in the larger sizes.

“They constantly change product specifications almost to the final moment, so you’re not really sure whether this is the final prototype,” said a source with direct knowledge of the matter.

Apple declined to comment.

Apple’s possible shift to offer what is often referred to as “phablets” - chunkier smartphones not quite big enough to qualify as tablets - comes as the longtime darling of consumers and investors faces pressure to deliver more than one new handset model a year. Critics say its pace of innovation has slowed since the death of legendary co-founder Steve Jobs.

The iPhone 5 launched in September was the first to veer away from the Apple phone’s 3.5-inch screen, which Jobs famously deemed “the perfect size for consumers” and had been used in every iPhone since the iconic device was unveiled in 2007.

The current iPhone 5 has one of the smaller screens among the best-selling smartphones in the mobile market, where consumers spend more time browsing the web and streaming content. Samsung’s Galaxy S4 and Galaxy Note 2 have 5-inch and 5.5-inch screens.

For this year, Apple is expected to launch two new models widely referred to as the iPhone 5S, with new fingerprint technology, and a cheaper version in plastic casing, supply chain sources have said. Apple plans to dress up the cheaper phone in a range of five or six colors to differentiate it from the more expensive model that has traditionally come in black or white.

The U.S. firm has discussed a price of $99 for the cheaper phone, the timing of which could slip to next year, according to a source.

Apple - whose revenue growth has decelerated from the heady days of 2010 when it introduced the iPad and the iPhone was the world’s top selling smartphone - has sought ways to re-energize its flagship line.

Analysts say the company needs a cheaper gadget for growth markets in China and India, and to counter Samsung’s edge in having phones up and down the price spectrum. China, the world’s biggest smartphone market, is set to grow 48 percent this year, outpacing the global increase of 31 percent, according to industry forecasts.

While Apple only offers a single phone model across all markets, it has successfully marketed the iPod music player and its iPad in different sizes and at varying prices. Asked at last month’s AllThingsD industry conference why Apple hasn’t launched different sized iPhones, CEO Tim Cook said: “We haven’t so far. That doesn’t shut off the future.”

He explained that the range of iPods serve different audiences and needs. “On the phone, that’s the question. Are we now at a point to serve enough people that we need to do that?”

Cook noted a larger screen comes with trade-offs on features such as battery life, resolution and brightness.

Test production for both the standard and cheaper iPhone models aims to start next month, with mass production ramping up in August to meet a September launch target, said two sources.

“Trial production was originally planned to start in June, but the mixing of colors is taking longer than expected as Apple has very high and idealistic standards,” said one source in Asia, adding that 20 million plastic iPhones are expected to ship in the October to December quarter.

Reuters