Why Apple is focusing on making iPhones a bigger screen

When Apple (AAPL) presents its latest iPhone line on September 12th. It will probably feature three new handsets with screens as big as or bigger than the company's largest screen to date.

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Consumers have shown a preference for smartphones with larger screens and are willing to pay a premium for this feature. This will give Apple pricing power with its 12th generation iPhones, said Tuesday in a report Andy Hargreaves, an analyst at KeyBanc Capital Markets.

"Pricing for the new iPhone is expected to be slightly higher than current sales expectations, which could be a positive catalyst for consensus revenue and earnings guidance for the 2019 fiscal year," said Hargreaves. Apple's 2019 fiscal year begins on September 30th.

But the pricing of the iPhone will probably culminate with the new models, he added.

New iPhones Could Cost More Than Expected

Analysts expect Apple to release an updated version of its 5.8-inch iPhone 5 OLED display, which is currently its biggest screen on the iPhone. The new handset could call the iPhone XS.

Apple is also expected to introduce a 6.5-inch OLED handset, probably called iPhone XS Plus.

Finally, we see Apple release a 6.1-inch LCD handset, perhaps called the iPhone 9.

Hargreaves thinks that Apple will set the price of the iPhone XS from $ 949, against a $ 899 wait. The current iPhone X starts at $ 999.

He estimates that Apple will set the price of the iPhone XS Plus at $ 1,049, against $ 999 for the consensus.

He sees the iPhone 9 from $ 749, according to the views.

Larger screen size

"Over the last six years, the size of the display is the only feature that we believe has demonstrated a consistent ability to generate volumes and high prices," said Hargreaves. "This was evident in the cycle of the iPhone 6, where an increase in the size of the screen resulted in both price and volume, and in the cycle of the iPhone X, where

But Apple is reaching the limit for screen sizes that can still fit in pants pockets, Hargreaves said.

Rival Samsung is working on a smartphone with a folding screen that would give his device more screen. Samsung will unveil its foldable smartphone later this year, CNBC's DJ Koh, general manager of Samsung's mobile division, told CNBC.

Hargreaves evaluates Apple stocks in terms of sector or neutral weight.

Apple Stock gets another rise in price targets

Elsewhere on Wall Street, Morgan Stanley on Wednesday raised its target price on Apple shares to 245 against 232 and reiterated its overweight.

Apple's shares fell 0.7% to close at 226.87 on the stock market today. Earlier in the session, he recorded his sixth record in as many trading sessions. He reached a record high of 229.67 in morning trading before reversing it.

Tuesday, Canaccord Genuity and RBC Capital Markets raised their price targets on Apple's shares.

Apple Streaming Video Service takes shape

Morgan Stanley analyst Katy Huberty sees great potential for Apple's video streaming service. She noted that Apple spends about $ 1 billion in video content for service this year alone. He bought 24 new shows and forged content partnerships with Steven Spielberg, Oprah Winfrey and Sesame Workshop.

If Apple were to start service at $ 7.99 a month, it could reach more than 50 million paying subscribers by 2025, she added. Huberty thinks that Apple will evaluate its service below its competitors such as Netflix (NFLX).

Apple may decide to bundle its video service with its streaming music offering, Apple Music, and its subscription service to magazines and digital information, Texture, and charge $ 12.99 a month, she added. Huberty called the service "Apple Media".

"From a financial point of view, we think there is a clear reasoning why Apple would pursue the Apple Media package," she said. "However, we believe that the most likely option will be a combination of both, that is, the Apple Video offering as a standalone option at $ 7.99 / month, but also the Apple Media offering. at $ 12.99 / month. "

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