Bigger iPhones clearly aimed at consumers’ changing preferences
Apple’s (AAPL) iPhone 6 and iPhone 6 Plus have the potential to disrupt two markets within the broader smartphone industry. One is the bigger-sized smartphone market and the other is the mobile payment market. Apple’s 4.7-inch iPhone 6 and 5.5-inch iPhone 6 Plus are much bigger than the company’s previous model, the 4-inch iPhone 5S. Consumer response to Apple’s new smartphones has been huge, with 4 million pre-orders combined on the very first day of the launch.
Apple’s strategy to introduce bigger-sized iPhones clearly aims at leveraging consumers’ current preference for bigger devices. Consumers find bigger screens more engaging and vivid—better for viewing photos and videos. Plus, carrying a larger smartphone eliminates the need for tablets, especially smaller tablets. This is probably the reason why Apple may be thinking of launching a bigger iPad, something we covered in our series titled “Why Apple introducing a 12.9-inch iPad could affect the market.”
Apple needs a successful iPhone 6 to increase its presence in the smartphone market
Apple needs a successful iPhone 6 because it has been consistently losing ground in the smartphone market. According to a report from Strategy Analytics, and as the chart above shows, Google’s (GOOG) (GOOGL) Android continues to dominate the smartphone operating system market. Google’s share of the global smartphone operating system market has increased from 80% in 2Q13 to about 85% in 2Q14, while Apple’s has declined from 13.4% to 11.9% during the same period. Microsoft’s (MSFT) and BlackBerry’s (BBRY) shares also continue to decline.
This is why Apple must sort out its production issues quickly and make iPhones available in emerging markets sooner rather than later. The potential demand for the iPhone 6 Plus in Asian countries such as India, China, and Japan is huge.
Apple could revolutionize the payment system with Apple Pay
Apple Pay is a mobile payment feature that relies on near field communication (or NFC) technology. Although Apple isn’t the first player to introduce mobile payments using NFC, it could be the one to solve some of the problems affecting the adoption of NFC technology. For example, Apple Pay’s one-click checkout process could save time for the consumer by making transactions faster than those made with credit cards.
Apple has already partnered with 220,000 stores in the U.S., including popular retailers such as McDonald’s (MCD) and Staples (SPLS), to integrate Apple Pay with existing systems. Apple promises that Apple Pay transactions will be more secure than credit card transactions. Why? Because Apple Pay involves fingerprint authentication, followed by the generation of a unique code that’s encrypted before then being sent to the card reader to complete the transaction.