Apple's iPhone 5S: What We Can Expect

Updated from Sept. 3 to include analysis from Nomura on the second page.

NEW YORK ( TheStreet) --The world awaits Apple ( AAPL) and the iPhone 5S, expected to make its big splash later today. With tons of rumors and speculation being bandied about, it's important to separate the truth from the half-truths and the ridiculous.

Interest in the next iPhone from Apple has been ramping up in the past few weeks, especially as Apple said it sold 31.6 million iPhones in its most recent fiscal quarter. That was up from 26 million in the year-ago quarter, a sign that interest in the iPhone still continues to be strong.

Apple is expected to unveil the new iPhone along with a lower-end iPhone, dubbed the iPhone 5C, at Apple's headquarters in Cupertino, Calif.

CEO Tim Cook has argued that the high-end of the smartphone market is not slowing down. "And I don't subscribe to the common view that the higher end if you will of the smartphone market is at its peak," Cook said on Apple's most recent earnings call. However, with the launch of the iPhone 5C, Apple may in fact be looking toward the lower end of the market in an effort to grab market share away from Google's ( GOOG) Android operating system, and allow it to compete better in China.

What it Will Look Like

Apple's past release, the iPhone 5, was a drastic change from the iPhone 4 and 4S as it offered a larger screen and a thinner body. The iPhone 5 is 4-inches, and most expect that Apple will keep the phone the same size, with a 4-inch screen.

The iPhone 5 is 18% thinner (just 7.6 millimeters) than the iPhone 4 and 4S and it's expected Apple will retain the same thinness and perhaps the same weight at a mere 112 grams.

The casing of the iPhone 5S will likely be very similar to the iPhone 5, with an aluminum body, except for a couple notable features. We've seen recent pictures that the iPhone 5S will come in a gold or champagne color, offering something different than the standard black or white iPhone. There have also been pictures indicating Apple will release a graphite-backed iPhone, further differentiating the color scheme on its chief revenue driver.

Aside from the actual physical features of the iPhone 5S, the biggest change will likely be to the operating system. "The big update for most users I think will be iOS 7," said Ironfire Capital managing director and Real Money contributor Eric Jackson. "I still think that's going to be the biggest surprise."

Apple's latest mobile operating system is a drastic change to its predecessors, with flatter icons and a new color scheme.

Features and Beneficiaries

Now that Apple has introduced Long Term Evolution (LTE) into its product line-ups, we can expect that to be the case going forward until a standard emerges.

The big new feature people are expecting from the iPhone 5S is fingerprint technology, or biometrics, allowing users to unlock their phones with their fingerprints, instead of entering a password. The fingerprint scanning may also play a heavy part in Apple's move towards mobile payments, something that's been speculated on since Apple announced Passbook as part of iOS 6 last year.

There's always speculation that Apple will do something with payments processing, especially as it looks to build up its software and services revenue. On Apple's fiscal second-quarter earnings call, Apple CEO Tim Cook answered Piper Jaffray analyst Gene Munster's question, saying the payments space is just getting started. "I think it's in its infancy, Gene," Cook said on the call. "I think it's just getting started and just out of the starting block."

Capital Advisors Growth Fund ( CIAOX) portfolio manager Channing Smith believes that Apple needs to do something innovative, such as having Near-Field Communication (NFC) functionality, finger print authentication or something else to get investor enthusiasm back. "The company is at a critical juncture and this product cycle will be an important driver as to the direction of the stock price into year-end," Smith said in an email to TheStreet. "While it is natural for innovation to slow the further you move into a technology cycle, we still believe the odds are high Apple will surprise the market with the unforeseen innovation that we have come to know and expect with product introductions over the last decade."

Apple acquired AuthenTec, a maker of fingerprint technology in 2012, and since then rumors have swirled that this will be included in the latest iPhone release.

Nomura analyst Stuart Jeffrey, who rates Apple shares "neutral" with a $420 price target, believes the fingerprint authentication will be a boon for iPhone buyers. "We expect the iPhone 5S to be a compelling upgrade for 4S users, in a way the 5 was for 4 users, i.e reasonably compelling but not comparable to the 4 or 4S in prior years," Jeffrey wrote in a research note.

In addition to the fingerprint technology, the iPhone 5S will likely have a larger and better camera, which could help Sony ( SNE), as it's supplied the 8 MP back camera for the iPhone 5, and Omnivision Technologies ( OVTI), which makes the iSightHD front camera.

Qualcomm ( QCOM) may benefit, should Apple decide to use Qualcomm's new global chip to help cut down on costs and truly be a global iPhone.

In February, Qualcomm released the RF360, which supports all networks around the world. The RF360 supports the following networks: LTE-FDD, LTE-TDD, WCDMA, EV-DO, CDMA 1x, TD-SCDMA and GSM/EDGE, which would allow Apple to make a "global iPhone," which supports LTE connectivity.

If Apple does use the RF360, the long-awaited deal with China Mobile ( CHL), the world's largest carrier with over 700 million subscribers, could happen sooner than previously thought. Cook recently visited with China Mobile for the second time this year to discuss "matters of cooperation," further adding fuel to the fire.

There's a high likelihood that Apple will unveil the latest version of its A-series processors, the 64-bit A7, used to run its iDevices. The A7 is reported to be 30% faster than its predecessor, the A6. Apple designs its own chips using intellectual property from ARM Holdings ( ARMH).

Apple may also extend the battery life on the iPhone. The iPhone 5 has 8 hours of browsing time on LTE networks, 8 hours of talk time and 10 hours of talk time.

Whatever Apple does indeed announce, it'll likely capture the interest and imagination of the media, consumers, Wall Street and perhaps the world alike. That's "one more thing" worth waiting for.

-- Written by Chris Ciaccia in San Francisco

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