Bigger iPhone Screens Are Expected to Pay Back Apple in Services Profit, According to Latest Analysis
Screen size is one feature that can boost both sales volume and revenue for a number of reasons. However, this might not be the sole reason that compelled Apple to increase the display size of two of its upcoming iPhones by nearly 23 percent.
Analysts State That Users Will Spend More Time on Their iPhones Take Advantage of Services If They Receive a Bigger Screen Size in Return
Granted, screen size can increase sales volume, but there is more to it for Apple. The company, which will reportedly introduce a 6.1-inch successor to the iPhone 8 and a 6.5-inch Plus-sized version of iPhone X’s successor, sees opportunities beyond the initial sales boost.
Jennifer Chan, analysts at the research firm Kantar Worldpanel, said that since people spend more time on larger devices, Apple can capitalize on this extra screen time. According to Kantar Worldpanel, individuals who own smartphones that are 6 inches or larger use double the apps that people with 5.5-inch screens do typically.
Even though Apple has to spend nearly $33 more to make Plus-size variants of the iPhone, it is compensated well with a margin of $100. Screen size alone enabled the Cupertino giant to earn around $77 more per iPhone 8 Plus as compared to the iPhone 8.
Another ex-Kantar analyst said that larger screens can benefit the entire Apple ecosystem and drive up revenue. Since watching videos on larger screens is far more immersive and entertaining, it can increase the subscription to Apple's video streaming plans. Owners of larger devices are also more likely to play games and consume media as well.
However, it is likely that Kantar is confusing the cause and effect relation here as it is possible that people who plan to get more out of their devices are the ones that are ready to pay higher prices for larger phones, and not the other way round. However, multimedia is undeniably more appealing on larger screens and Kantar might be on to something as Apple announced just last year that it wants to double the revenue it gets from its services division.
Nearly 1.3 billion people around the world use iPhones and Apple makes nearly 30 per device every year from services like Apple Music. This can go up if the large-screen assumption ends up being true and seeing as how there are natural benefits that come to using increased screen size, Apple might have a terrific plan set in motion.
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News Source: WSJ