Apple Inc. (NASDAQ:AAPL) told investors on its earnings call last month that it wouldn’t make a 5-inch iPhone—at least not right now. The iPhone 5 does have a slightly larger screen than the 4S, although it’s the same width, making it easier for users to hold it in their hand. However analysts at Barclays PLC (ADR) (NYSE:BCS) smartphones with larger screens seem to be more popular outside the U.S., so a phablet may be just the thing Apple Inc. (NASDAQ:AAPL) needs to gain market share outside the U.S. while also maintaining the high average selling price it has been known for.
In a report issued to investors this morning, Barclays PLC (ADR) (NYSE:BCS) analysts said their global tech team predicts that the 5-inch and up smartphone market will balloon up in the next few years, growing from just 27 million phablets in 2012 up to 230 million by 2015. If they are correct, then Apple Inc. (NASDAQ:AAPL) has a lot to gain by introducing an iPhablet.
Analysts at Barclays PLC (ADR) (NYSE:BCS) said in the middle of this year, they believe Apple Inc. (NASDAQ:AAPL) will introduce two iPhone models: a low cost model that’s designed for emerging markets and an iPhone 5S with a few upgrades from the iPhone 5. They believe Apple’s most important advances this year will be in iOS and software. They also expect that Apple will be able to move into regular payments with an Apple Television set and also upgrades to iCloud, including the addition of subscription services.
They say it could be the fourth quarter of 2013 or even into 2014 before Apple Inc. (NASDAQ:AAPL) adds a 5-inch iPhone to its lineup, and by then, the company will need “some incremental innovations” in it when compared to other 5-inch products that are out there. Barclays analysts believe that an iPhablet “or other large screened phone could offset” some of the average selling price declines they believe will occur due to the production of a low-end phone.
Analysts at Barclays have maintained their Overweight rating and $575 price target on shares of Apple Inc. (NASDAQ:AAPL). Shares of Apple are mostly flat in pre-market trading.