Why Size Matters to Apple

NEW YORK ( TheStreet) -- While Apple's ( AAPL) widely anticipated iPhone 5S launch looks set to grab the headlines next week, rumors are swirling that the tech giant's long-term plans include large-screen smartphones.

Citing people familiar with the matter, The Wall Street Journal reports that Apple has begun evaluating a plan to offer iPhones with screens between 4.8 and 6 inches.

Apple has not yet responded to TheStreet's request for comment on this story.

Apple's iPhone 5, which was released last year, has a 4-inch screen, although rivals such as Samsung have been touting much larger screens for some time. Earlier this week, for example, the South Korean firm unveiled the third version of its Galaxy Note, which has a 5.7-inch screen.

"The shift by competitors to mega-screen sizes has been one of the bricks in the wall of worry around Apple," wrote Brian White, an analyst at Cantor Fitzgerald, in a note released on Friday. A larger-screen iPhone could also prove critical in the Asian market, particularly China, he added.

The Cupertino, Calif.-based company has been ramping up its efforts to tap the lucrative Chinese market. Apple enjoyed double-digit iPad growth in China during its recent fiscal third-quarter, although local economic pressures slowed overall revenue growth.

Nonetheless, White, a noted Apple bull, predicts great consumer appetite for a large-screen iPhone.

"During our trips to China over the past eighteen months, we have noticed a growing trend toward consumers purchasing 'awkwardly' large smartphones (or 'phablets') that were often 5-inches or above," he wrote. "These mega-sized smartphones are seen as a fashion statement and also help consolidate devices. In our view, the introduction of the Galaxy Note in China got the momentum started and most of the smartphone competitors followed."

In a report released earlier this week, White noted that a larger-screen iPhone is possible in 2014, which could have an approximately 5-inch screen. "However, a six-inch screen sounds more like an 'iPhad' than an iPhone," he added.

Although Apple has traditionally avoided large-screen smartphones, the company does offer a range of sizes across its iPod and iPad lines, so the iPhone could well follow this trend.

In the near-term, however, attention will be focused on Apple's likely iPhone 5S. Earlier this week Apple sent out invites to an event at its headquarters, which is widely expected to mark the new phone's debut.

Underlining the importance of the Chinese market, Apple also sent out invites to an event in China on the following day. The event at Beijing's World Trade Center could herald the arrival of a low-cost iPhone, dubbed the iPhone 5C, a deal with China Mobile ( CHL), or both.

Shares of Apple, which have dipped 6.51% this year, gained 0.45% to reach $497.55 during Friday trading.

--Written by James Rogers in New York.

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