Internal Apple(s aapl) documents released during the company’s current patent trial with Samsung show that Apple clearly understands it doesn’t have a smartphone product for everyone. Right now, Apple lacks both a no-contract sub-$300 iPhone and a larger screen iPhone. The timing of the document release lines up nicely with recent reports that Apple will offer at least a 4.7-inch iPhone this year, if not an additional 5.5-inch model as well.
Re/code shared some of the court documentation this weekend and among the several slides was an Apple strategy presentation outlining what Apple doesn’t offer versus what consumers want from their phones.
We’ve noted several times over the past year that the expensive smartphone market is generally saturated; more growth is coming from budget models such as the $179 Moto G. Nokia(s nok) too is a big player here, recently announcing its Lumia 630 and 635 handsets starting at $159 without contract. I don’t think Apple is likely to mount a major campaign in this market, however. Doing so would reduced the average selling price of its phones and also cut deeply into per-device profits.
Instead, it’s a safer bet that Apple will bring its consistent mobile experience to larger iPhones this year. Those phones could command a premium price above the iPhone 5s, which starts at $649. I also wouldn’t be surprised to see Apple finally reduce the cost of its traditional iPhone and offer a larger device at the current price: Think $599 for the iPhone 5s and $649 for a bigger model.
While Apple does a fantastic overall job with hardware and software design, the one area I think it has lagged in is device size. In 2011 I argued in favor of a 4-inch iPhone as other handsets with larger displays provided a better visual experience for gaming, apps and video. Apple didn’t move to that screen size until the iPhone 5 launched 18 months later. I also dumped my original 2010 iPad for a 7-inch slate as I saw more portability in such devices; that led to Apple recognizing the market for smaller tablets, with the result being the 7.9-inch iPad mini in 2012.
Clearly, there’s still a market for Apple’s 4-inch iPhone, as the company is selling tens of millions of them. And for some, it’s the perfect size for one-handed use. But there’s room in the market, not to mention consumer pockets, for a larger iPhone. We already knew that; it’s nice to see Apple knows it as well.