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Why This 2020 Apple iPhone Rumor Is Probably False

Ashraf Eassa, The Motley Fool

A little while back, an analyst at Jeffries & Co. published a set of predictions about the display sizes and display technology that Apple (NASDAQ: AAPL) would use in future iPhones through the year 2020.

Among these predictions was the claim that the upcoming iPhone with a 6.1-inch liquid crystal display (LCD), which is supposed to bring an iPhone X-like form factor to a lower price point, will launch as an iPhone SE in 2018 and then be replaced in 2020 with a so-called "iPhone XE" with a smaller 5.2-inch organic light-emitting diode (OLED) display.

Apple's iPhones in a

Image source: Apple.

Here's why that's not a realistic expectation.

Piecing together the puzzle

When rumors of the 2018 iPhone lineup first began to surface, there were three models mentioned. One with a 5.28-inch OLED display, another with a 5.85-inch OLED display, and one with a 6.46-inch OLED display.

The 5.85-inch model would be a direct successor to this year's iPhone X, which, not so coincidentally, sports a display that measures 5.85 inches along the diagonal. The 6.46-inch version would be targeted at higher-end users who want even more screen real estate and the 5.2-inch model would presumably be aimed at more cost-sensitive users as well as individuals who just want a smaller version of the iPhone X.

However, The Bell (via The Korea Herald) claims that Apple put the brakes on the development of the 5.28-inch iPhone model because it'd be difficult to market as smartphone users seem to increasingly prefer devices with larger displays. That same report also said that Apple had placed orders for LCDs larger than six inches for a new iPhone instead. LCDs offer worse contrast than OLEDs, but are cheaper to manufacture, which makes them suitable for more cost-sensitive devices.

Since then, The Bell's report has been corroborated by other sources, most notably KGI Securities analyst Ming-Chi Kuo, who says that Apple is planning to launch two OLED iPhones next year -- one with a 5.8-inch display, another with a 6.5-inch display (the more precise figures are almost certainly 5.85 and 6.46, respectively), and one with a 6.1-inch LCD.

It's clear, then, what happened: Apple decided that it'd make more sense to offer a larger-screen device with a less advanced LCD to target more cost-sensitive users than to try to sell a miniature version of the standard iPhone X to those same customers.

A more likely scenario

I think it's far more likely that the iPhone with 6.1-inch LCD will continue to see regular updates in the years ahead rather than be replaced with a smaller model with a more advanced display. Apple can continue to update the internals of such a device, making it more capable with each generation, and I wouldn't be surprised to see it continue to improve the quality of the display over time.

Indeed, Apple could work with its display manufacturing partner (in this case, Apple is believed to be sourcing panels for the 6.1-inch LCD iPhone from Japan Display) to improve display quality and performance.

Additionally, I expect Apple to carry over some of the display innovations that it first introduced in the iPad Pro line.

One such feature that I expect Apple to introduce in the next LCD iPhone is variable refresh rate technology. Apple first introduced this tech with the 9.7-inch iPad Pro, and it worked by adjusting the rate at which the display updates its contents to match the rate at which the material being viewed is updating.

Apple's iPad Pro on the left and iPhone 7 on the right.

Image source: Apple.

So, for example, if a full-screen video is playing at a rate of 30 frames per second, the display would adjust its refresh rate to 30 frames per second as well. Reducing the display's refresh rate to match content speed doesn't impact user experience with the content but it does save power, ultimately helping to improve battery life.

While OLED displays get a lot of attention, the truth of the matter is that the LCDs used in the iPhone 8 and iPhone 8 Plus today are still excellent and there's plenty of room for Apple to make them even better with time.

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Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.