How? By charging $100 more for the 5.5-inch, I'm factoring in that Apple will get 36% to 38% of its revenue from this phone. This will be a more conservative difference from what we witnessed between the iPhone 5S and the lower-end 5C. Again, we can point back to Samsung and look at its mix of products and the demand generated for the Note and Galaxy since the launch of the Note product line.
Also, investors shouldn't discount the viability of the iPhone 4S and management's ability to prolong that life cycle for another year or even two. It seems inconceivable. But consider the 4S still ranks at the fifth-best-selling phone around the world. So keeping the 4S around would benefit Apple more in the long term from a gross margin perspective as opposed to maintaing the iPhone 5C at the low end.
Apple understands consumers are willing to pay a premium for a distinguishable device. I'm projecting Apple will sell enough of the 5.5-inch models, which will cost $100 more to consumers, to help maintain its consistent rate of 37% to 38% gross margin.
For now, long-term investors only need to focus on Apple's ability to grow earnings at mid-single digits while paying a healthy dividend.At the time of publication, the author was long AAPL. Follow @Richard_WSPBa¨ This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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