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Why Apple Is Waiting for a Bigger iPhone

Thursday - 4/25/2013, 3:30am  ET

The chorus of analysts and investors calling for Apple to launch a larger iPhone continues to get louder. There's no doubt that a segment of the smartphone market prefers larger phones, and everyone keeps wondering when Apple will step up to meet that need.

Barclays analyst Ben Reitzes took the opportunity to ask again, since he asked the same question on the January call. He asked Tim Cook if his view of the 5-inch phone market had changed at all in the past three months, or if Cook felt that the 4-inch display is still sufficient.

According to Cook, it's all about trade-offs:

My view continues to be that iPhone 5 has the absolute best display in the industry. And we always strive to create the very best display for our customers. And some customers value large screen size, others value also other factors such as resolution, color quality, white balance, brightness, reflectivity, screen longevity, power consumption, portability, compatibility with apps and many things.

Our competitors had made some significant trade-offs in many of these areas in order to ship a larger display. We would not ship a larger display iPhone while these trade-offs exist.

The CEO clearly feels like jumping the gun with a bigger iPhone display would translate into sacrifices in other important areas that affect overall display quality.

Cook also noted certain weaknesses such as color saturation and brightness with OLED displays back in February at a Goldman Sachs conference, which sent shares of Universal Display reeling briefly before the OLED specialist recovered. That was likely a knock directed more in Samsung's direction, since the South Korean company is the biggest proponent of OLED displays in mobile devices, but Samsung is also Universal Display's biggest customer. Universal Display simply got caught in the crossfire.

But he didn't say "no"
Cook didn't say "no" to a larger iPhone. Instead, he implied Apple would only launch a larger iPhone to address the growing phablet niche after it can properly address the lengthy laundry list of trade-offs.

Fortunately, the continued strength of the iPhone 4, a nearly 3-year-old smartphone with a 3.5-inch display, shows Apple can afford to wait.

With the prospect of a larger iPhone looming, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

This article was originally published as Why Apple Is Waiting for a Bigger iPhoneon

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