By LORRAINE LUK And JURO OSAWA
HONG KONG—Apple Inc., AAPL +0.27% which is expected to launch its next-generation iPhone later this year, has ordered screens from its Asian suppliers that are bigger than the ones used in iPhones since they debuted in 2007, people familiar with the situation said.
Production is set to begin next month for the screens, which measure at least 4 inches diagonally compared with 3.5 inches on the iPhone 4S, the latest phone from Apple, the people said.
The move suggests that the Cupertino, Calif.-based company is trying to make its popular smartphone more appealing amid intensifying competition from rival Samsung Electronics Co. of South Korea. Samsung, which became the world’s biggest cell phone maker in the first quarter, recently unveiled its new flagship smartphone with a 4.8-inch display, one of the largest smartphone screens.
Bloomberg NewsAs Apple prepares for a launch of a new iPhone later this year, people familiar with the situation say the company is planning for a larger screen. Above, the Apple store in Hong Kong.
Until now, Apple has never changed the size of the iPhone’s screen, which has always been 3.5 inches from the first model that debuted in 2007. For the next iPhone, which analysts predict will come out in the fall, Apple is working with multiple screen makers including South Korea’s LG Display Co., LPL -3.60% Japan’s Sharp Corp. 6753.TO -2.37% and Japan Display Inc., a new company created last month by three Japanese companies and the government, some of the people said.
Apple has also stuck with one size for its iPad tablet, while other manufacturers have produced a range of sizes. The Wall Street Journal reported in February that Apple was testing tablet computers with screens smaller than the 9.7-inch screen on the existing iPads.
An Apple spokeswoman declined to comment.
Apple effectively defined smartphones as a new category with its iPhone, but the market has rapidly evolved and expanded over the past few years and is now crowded with many brands selling smartphones in various sizes and price ranges.
Apple, the world’s most valuable company, faces particularly fierce challenges from Samsung, which sells a much broader variety of phones. The two companies together account for more than half of the world’s smartphones. In the quarter through March, Samsung shipped 44.5 million smartphones to grab a 30.6% share of the global market, topping Apple’s 24.1% share with 35.1 million iPhones, according to market research firm Strategy Analytics.
This year, analysts expect Samsung’s smartphone shipments to double, while the next iPhone is also expected to boost Apple’s shipments.
Samsung said that the Galaxy S III, a new version of its flagship smartphone, will hit stores in Europe this month and in the U.S. this summer. Its 4.8-inch screen is larger than the 4.3-inch display on the company’s current flagship model Galaxy S II. Taiwan’s HTC Corp., 2498.TW -6.59% another major smartphone maker, also has models with screens larger than 4 inches.
A new iPhone with a larger screen wouldn’t necessarily mean that Apple is making changes to its products because of what rivals are doing, said Mizuho Investors Securities analyst Nobuo Kurahashi.
“The smartphone market has become diverse, but the iPhone still sets the agenda,” with the whole industry watching Apple’s every move, he said. He said that the iPhone’s strength lies in the overall experience including its user interface and applications, and the screen’s size wouldn’t be its defining feature.
“If Apple ever released a lower-priced iPhone, that would be more of a sign that the changing market environment is beginning to affect the company,” he added.
The iPhone remains a big growth engine for Apple, and the phone’s popularity in Asia was a key factor behind the company’s robust earnings for the most recent quarter through March. Its profit nearly doubled in the quarter, while iPhone sales jumped 88%.
Aside from their rivalry in the smartphone market, Samsung and Apple have been locked in a legal battle. Apple last year sued Samsung over smartphone design and patents, and Samsung countersued. At the same time, they are dependent on each other as Apple is the largest customer for Samsung’s component divisions, which make key parts for smartphones and tablets such as chips and displays.
Apple doesn’t manufacture its own products. Like many other major consumer-electronics brands, it hires manufacturing specialists—many of which are from Taiwan and have extensive operations in China—to assemble its gadgets, using components made mostly by Asian suppliers.