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Apple Inc. is preparing to expand its iPhone line-up, with the goal of generating profits in its largest company, despite stagnating unit sales, while boosting the growth of more attractive apps and services for end-users. bigger screens.
The tech giant plans to announce two new models with its larger iPhone screens: a cheaper device with a 6.1-inch LCD and a more expensive with a 6.5-inch display using OLED technology more advanced, according to people familiar with the plans. The company will also unveil an updated version of its iPhone X, featuring a 5.8-inch OLED display, which will benefit from a faster processor for better performance, they said. Apple declined to comment.
The trio of phones will be equipped with other features, such as facial recognition technology, but its display size will stand out: its average screen area, regardless of a facial recognition system that exceeds the L & # Last year, three new phones and 28% more than the two models unveiled in 2016.
At a time when people are buying fewer new phones, a larger size brings two benefits. It helps Apple increase its prices and profit margins because it can sell larger phones with a higher profit margin than it pays suppliers for larger screens. And this encourages users to make more use of their phone, which is contributing to the growth of Apple's service activities, including app sales and subscriptions to video services such as Netflix and HBO.
Users with smartphone screens of 6 inches or more, as Apple plans to launch this year, typically use twice as many applications as those with 5.5-inch displays, such as those of the larger versions of iPhone 6 or 7, said Kantar Worldpanel. market research firm. Larger device users are also 62% more likely to play games and twice as likely to watch videos daily than people with smaller screens.
"The bigger the device, the more people come out of it, and the more opportunities there are for Apple to generate money," said Jennifer Chan, an analyst at Kantar Worldpanel. She added that larger phones typically have faster processors, more memory, and better graphics than smaller devices, which also contributes to their use.
Although the iPhone remains Apple's largest product, accounting for about two-thirds of its revenue, unit sales growth has slowed in recent years and is expected to stabilize further with smartphones.
IPhone revenue grew 15 percent to $ 129.51 billion from Apple's first three quarters through June, even as shipments increased 0.4 percent to 170, 8 million units during the period. Over the same period, the services sector reached $ 27.2 billion, up 26%.
Services is one of the fastest growing businesses in Apple. The company has 1.3 billion iPhones and other devices in active use and earns about $ 30 per device each year through application sales, music subscriptions and other offers, according to
Morgan Stanley
,
which expects services to account for approximately 60% of Apple's revenue growth over the next five years. In contrast, the iPhone accounted for 86% of sales growth over the previous five years, according to estimates by Morgan Stanley.
According to Carolina Milanesi, an analyst at Creative Strategies, a technology research company, Apple plans to offer additional services, such as Hollywood programming and a subscription to magazines.
"The biggest screen is not just about real estate," said Ms. Milanesi. "It's a much larger game that benefits the Apple ecosystem."
The biggest phones are landing at a time when concerns about the excessive use of smartphones are increasing. After receiving a letter in January from investors urging the company to deal with a possible health crisis related to youth addiction, Smart Apple will make available to all new iPhone users software announced in June to allow them to monitor their use. The company's leaders said the tools would limit distraction and improve parents' ability to control how their children use the devices.
The other updates planned for the new iPhones should be more modest than those of last year. True to its tradition of offering hardware enhancements a year after a major overhaul of the iPhone, Apple this year introduced facial recognition technology on the three new devices and abandoned the fingerprint sensors.
Some 6.5-inch OLED devices will also be able to use two SIM cards, a chip that allows smartphone users to connect to a wireless network, allowing travelers to more easily access wireless networks at the same time. foreign. The feature will allow Apple to stay in step with its competitors in China, where dual SIM phones are popular.
Wednesday's event, to be held in Apple's new headquarters for the second year, is also expected to detail new fitness features for an updated smartwatch and an update to its line of AirPods wireless headsets.
The new iPhones are expected to start at $ 800 for the LCD model, $ 900 for the iPhone X update and $ 1,000 for the 6.5-inch OLED models, against $ 699, $ 799 and $ 999, depending on the unit. search of the Nomura group. . He predicts that iPhone's average selling price will rise by $ 20.
Larger screens, like larger memory chips in the past, only marginally increase Apple's costs, but the company charges customers an additional $ 100 for these big devices, said analyst Wayne Lam. at the research firm.
IHS Markit
.
As a result, Apple pocketed nearly $ 77 more in profits on the iPhone 8 Plus ($ 288), as it cost just $ 33 more than the iPhone 8 ($ 255), a- he declared.
"They have such a supply chain management and purchasing power that they can achieve all these different models without incurring additional costs," Lam said. "It's a much more sophisticated sales strategy than their peers."
-Yoko Kubota and Jie Yang contributed to this article.
Write to Tripp Mickle at [email protected]
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