Here's What the New iPhone May Feature

NEW YORK (TheStreet) --Now that Apple (AAPL) has reported record second-quarter earnings, speculation has ramped up about the company's most important product: the new iPhone.

Apple followed up its most successful quarter in history with its second-most successful, selling 35.1 million iPhones during the March quarter.

Channing Smith, portfolio manager at Capital Advisors Growth Fund, says Apple will continue to raise the bar with a 4G-enabled iPhone, which he expects in the fall.

"We expect it to have Near Field Communications (NFC), a larger screen and a better camera -- and it will be done without conceding battery life," Smith said in a recent interview. "Apple needs to continue to improve the competitive advantages it already has -- the way Apple has built its ecosystem is brilliant. They've locked so many users into their ecosystem -- that gives them an enormous advantage."

Intriguingly, Apple has filed a patent application for an iPhone made entirely of glass. This could be for the new iPhone, or a future version of the product.

It's not clear, though, what Apple will even call its new iPhone, especially after naming its third-generation iPad "the new iPad" instead of iPad 3.

Still, as we get closer (many are expecting an October launch given Apple's third-quarter guidance), the rumor mill continues to heat up. Here's what might be in the phone, expected to be released in the fall of 2012.

What the New iPhone Could Look Like

Apple's past two releases, the iPhone 4S and the new iPad, were seen as more of the same, with no radical redesigns from the previous versions. The new iPhone could allow Jony Ive and his product design team to push the envelope in terms of innovation.

Even though Apple has kept the design of the iPhone fairly stable, tech blog iLounge claims the new iPhone will have a 4-inch screen, larger than the 3.5-inch screen size it's had since it was introduced.

The new phone will also be thinner iLounge notes, as Apple slightly alters the dimensions of the phone.

Apple has never caved to public pressure and wants to keep things simple, but rumor of a 4-inch iPhone screen has been going on forever, so it's something to keep in mind.

There has been plenty of talk about the next version of the iPhone using Liquidmetal Technology for the casing of the iPhone, but Liquidmetal creator Dr. Atakan Peker may have recently put the kibosh on that in a recent interview. This will be something to keep an eye on, no doubt.

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Who Benefits From the iPhone?

It's almost certain that the new iPhone will run on Long Term Evolution (LTE) high-speed networks from AT&T ( T) and Verizon ( VZ). The new iPad is LTE-capable, so many expect this trend to continue for the new iPhone. Apple blog, for example, shows that the new version of Apple's mobile operating system has code for a potential LTE-enabled iPhone.

Microprocessors from Qualcomm ( QCOM) have been in iPhones previously, and if the iPhone is indeed LTE-capable, Qualcomm may stand to benefit, despite mentioning a shortfall in its 28-nanometer (nm) chip line. Qualcomm chips feature predominantly in the previous versions of iPhones and iPads.

Apple is transitioning toward the 28-nm chip, said Citigroup analyst Glen Yeung in a research note note after Qualcomm's report. "We attribute this shortfall predominantly to Apple, which is reducing demand for 45-nm baseband (MDM6610 in iPhone4S) in favor of 28-nm baseband (MDM9615 in iPhone5)," Yeung wrote. He reiterated his "buy" rating on Qualcomm shares and raised his price target to $74 from $73.

Wedbush Securities analyst Scott Sutherland expects 4G to be a big selling point for the new iPhone. Verizon said in March it would only be selling 4G smartphones this year. "With speech being a big driver for the iPhone 4S, we can only imagine what 4G will do for the next iPhone," Sutherland wrote in a March research note. He rates Apple shares "outperform" with an $800 price target.

Usage of LTE has shown battery life to decrease. Apple acknowledged that in its new iPad, when it said the battery would last nine hours on LTE, as opposed to 10 otherwise. Apple could improve the battery life in the new iPhone, as Capital Advisors' Smith suggests.

The likelihood of the new iPhone having Retina Display is almost a near certainty, as its predecessors the iPhone 4 and iPhone 4S did. The number of pixels could increase, with as many as 400 pixels per inch. The iPhone 4S has 326 pixels per inch, according to Apple.

There has also been increased talk that Apple may use Gorilla Glass 2 from Corning ( GLW) for the screen, something iLounge mentioned. Apple has listed Corning as a key supplier.

Apple may also bring FaceTime, its video-chat software, to wireless networks. Currently, FaceTime can only be done on Wi-Fi networks, but with LTE networks, the capability for increased use of FaceTime has expanded with iOS 5.1.

Besides LTE, the other major feature that may be in the new iPhone is Near-Field Communications (NFC). NFC technology lets customers pay for goods and services with their phones instead of cash or a credit card, simply by tapping their phone to a reader. The phone is linked to the person's bank account and the transfer is made. Broadcom ( BRCM) and NXP Semiconductors ( NXPI) both make NFC-based chips.

Even if the new iPhone has all, some or none of these features, one thing is certain. The rumors will only increase in frequency as we get closer to the fall.

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-- Written by Chris Ciaccia in New York

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