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New iPhone Leak Confirms Apple’s Significant Decision – Ewan Spence

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Apple is set to sacrifice screen quality for margins in this year’s iPhone portfolio. The latest reports from the supply chains and analysts suggest that the Cupertino-based company will choose cheaper LCD screens for the new iPhones expected in September 2018. That’s great news for Apple’s bottom line, but it leaves the iPhone lagging behind Android devices in terms of quality and appearance.

The advantage of OLED screens are well-known at this stage. Key is the reduced power requirements – especially important as the display can be one of the biggest drains on a smartphone’s battery. The screen has a much wider viewing angle before colors start to become washed out, and the colors presented by an OLED screen can be much more vibrant and ‘pop’ out of the screen.

In contrast, LCD screens require more power (the entire screen must be backlit, including ‘black’ pixels, unlike OLED where individual pixels provide the illumination). The colours will be washed out, the viewing angle is narrower, and motion blur is far more prevalent.

I would assume that the significance of choosing the cheaper LCD screen will be weighing heavily on Apple’s mind.

Last year’s new iPhone mix of the iPhone 8, iPhone 8 Plus and iPhone X include the first OLED-equipped iPhone (in the shape of the X) and two LCD based units (the iPhone 8 family). Tim Cook and his team were counting on a surge of interest in the advanced iPhone X (advanced compared to other iOS devices, I would argue the X simply offered parity with high-end Android-powered smartphones).

That super-cycle never appeared, suppliers had orders cut in the quarter following the launch, and while the iPhone X may have broken Apple’s internal records, the external evidence points to it falling short of the ambitious targets set by Cupertino.

I suspect that talk of Apple upping the availability of LCD units will simply be Apple reflecting the same sales pattern as last year and ordering parts on that basis, not on the mirage of iPhone X sales it was hoping for.

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But there are other advantages to keeping a mix of LCD and OLED in the portfolio. Not only will staying with cheaper LCD displays on the lower priced handsets increase the average revenue per handset, it will increase the attractiveness of Apple’s higher-end iPhones which will ship with the OLED technology.

As Apple’s market share of the smartphone market continues to fall, it is increasingly reliant on boosting the average revenue per handset or switching customers to handsets with greater margins. Keeping the high-end as expensive and as desirable as possible to make upselling from the ‘cheaper’ $799 handsets will be a key strategy.

The new iPhone models are expected to be announced at an Apple event in early September, with availability of the first US models in late September.

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