A larger screen, a larger market share?

Currently Apple holds a little over 20% of the world’s smartphone market compared to Google’s android which holds over 50%. However, with Apple’s launch of the iPhone 6 and the iPhone 6 plus, things may start to shift in Apple’s favor.

Looking at the launch of the iPhone 6 and iPhone 6 plus compared to previous models, we can see that the phones are slightly bigger. The iPhone 6 sports a 4.7 inch screen and the iPhone 6 plus sports a 5.5 inch screen. The iPhone 6 plus also marks Apple’s entry into the Phablet market which are devices between 5.5 inches and 7 inches in size. The Phablet market encompasses 175 million units and $46 billion dollars.

Comparing the iPhone 6 pre-orders to the iPhone 5 pre-orders, you find that over 4 million people pre-ordered the iPhone 6 or 6 plus compared to 2 million that pre-ordered the iPhone 5 before its release. And this is just within a single 24 hour period. The iPhone 6 pre-order also helped out Apple shares bounce back above $100 after Apple’s horrible decision to put a free U2 phone on everyone’s iTunes account.

With the larger screens Apple’s iPhone 6 is also likely to lure back customers lost to Android phones because of screen size as well as attract new customers who bought Androids exclusively for screen size. It at least eliminates one factor in removing Apple off the list of a prospective smartphone buyer. Supporting this claim is RBC Capital Markets research which has found that 26% of new iPhone purchasers are actually completely new to the iPhone.

However, Apple has underestimated the amount of demand for the iPhone 6 and may become supply constrained during the pre-order and launch period. If Apple can solve these problems in the short term, we may just see another Apple product boom… assuming people actually think the larger screens are an innovation.

  • Kevin Tsao

-- Kevin Tsao Leonard N. Stern School of Business New York University Class of 2016

kht249@stern.nyu.edu Kevin.Tsao@stern.nyu.edu 845-520-8146