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The Smart Money’s Expectations for the iPhone 5

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Apple (AAPL) is widely expected to announce the launch of the iPhone 5 at its live event in San Francisco on Wednesday, complete with the usual breathless media coverage and fan jubilation that greet most such announcements.

Beyond the hype, however, Wednesday is a very big day for Apple. Following its precedent setting patent victory over hardware rival Samsung in late August, the company is now poised to strengthen its grip on the global smartphone market. Will it cash in? Will the iPhone 5 cement Apple's reputation as the smartphone maker of choice worldwide?

The analysts have weighed in, and most expect big things from the company. Here's what a few of them are saying about the iPhone 5.

It Will Goose the Smartphone Market

"Apple's smartphone shipments typically are weak during the quarter preceding the launch of a new iPhone model," said Wayne Lam, a senior market analyst with IHS iSuppli. "Buyers historically have delayed their purchases until the newest model is available. Then they rush out to get the latest and greatest version once it's being sold, leading to a spike in demand."

According to Lam, this "anticipation lull" contributed to a one percent contraction in the global smartphone market in Q2. Not to worry, though. "The arrival of the iPhone 5 will help the global smartphone market return to growth," with projected shipments of 346.5 million in the second half of 2012, up from 272.3 million shipments of the previous iPhone model in the first six months of the year.

It Will Set New Records

"We anticipate that iPhone 5 will drive a significant product cycle and put a lot of pressure on competitors," wrote Sterne Agee analyst Shaw Wu in a note last week. "The previous update from iPhone 4 to iPhone 4S was arguable a relatively minor one, with Siri being the biggest new feature. Despite that, a record number of iPhones were sold."

Wu expects Apple to set a new sales record in the upcoming quarter, with as many as 45 million iPhones expected to fly off store shelves. The company's previous best quarter for iPhone sales featured "just" 37 million units.

It Will Be Both Thinner and Bigger

The iPhone 5 will also likely be the most advanced touchscreen device on the market at launch, if rumors of Apple's new in-cell touch technology are true.

Unlike traditional LCD displays, "in-cell touch technology places the touch sensors inside the LCD panel, as opposed to using a separate touch layer altogether attached on top of the LCD panel," explains Vinita Jakhanwal, IHS' director for small and medium displays. "In-cell touch can help reduce the thickness of the display, which could make the iPhone 5 thinner than previous models, or clear out space to add other features like a larger battery that can help extend operating time."

Jakhanwal also expects to see Apple move up to a 4-inch display on the iPhone 5, to take better advantage of the device's video playback features, and possibly even extending Apple's reach into on-demand mobile TV and video.

It Will Revolutionize the Industry

"Our assumption is that the iPhone 5 will be revolutionary in terms of form factor and software, driving a major upgrade cycle over the next 12 to 18 months," wrote JPMorgan's Mark Moskowitz in a note Tuesday. "The step-function from iPhone 4 to iPhone 4S was evolutionary at best, rendering the current product set nearly two years old, allowing the competition to bridge the gap. We think the gap widens after the September 12 announcement, in favor of Apple."

Moskowitz wrote that he expects Wednesday's announcement to have an impact on everything from the smartphone hardware "food chain" of suppliers, to the retail handset market, to the wireless carriers themselves.

What do you think? Will the iPhone 5 really be a game changer for the smartphone market?