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Apple's iPhone 5S: Innovation on the Tip of Your Finger (Update 2)

There have been concerns that Apple's iPhone, it's major revenue driver, has seen the peak growth days, and that's caused a huge slump in the share price since the iPhone 5 was released.

One thing Apple could do to avoid the peak-iPhone phenomenon would be to launch a lower-cost iPhone, White noted. Many analysts have opined on Apple releasing a cheaper alternative, with the consensus being it would be bullish for Apple. White's research noted that Apple will launch a lower-cost iPhone later this year. The cheaper iPhone would have a curved back with colored plastic and be thicker than the iPhone 5; it could cost as much as $400 without subsidies. "We believe this price point will provide relief for those investors concerned that Apple would be sacrificing too much margin or brand to serve the lower price band of the smartphone market," White noted.

Samsung, HTC and other OEMs have demonstrated that there is a market for larger smartphones, especially in China. Apple's iPhone 5 is the smallest smartphone among the newest set, at 4-inches, and White believes that if Apple were to release a larger phone, it could be a boom in Apple's second most important market.

"...[W]e believe it is inevitable that Apple will need a 5-inch to 5.5-inch iPhone or "iPhad" if the Company wants to remain competitive in China and elsewhere in Asia," White wrote in his note.

AAPL ChartAAPL data by YCharts

Apple shares were lower in Friday trading, off 0.98% to $430.09.

--Written by Chris Ciaccia in New York

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Stock quotes in this article: AAPL, GOOG 

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