As Apple prepares to unveil two models of its popular iPhone, both with larger screen sizes than previous iterations of the handset, an NPD Group report finds smartphones with screens 4.7 inches and larger are commanding more shelf space and unit share in the United States.
According to the report, U.S. nationwide carriers devoted about one-third of their shelf space to devices with a 4.7 inch or larger screen in the second quarter of this year, up from just 4 percent in 2012's second quarter.
North American shipments of 4.7-inch and larger smartphones are forecast to reach 120 million in 2014 and grow to 179 million by 2018.
While U.S. sales of smartphones with 4.7 inch or larger screens now account for more than one-quarter of sales, up from 2 percent in the second quarter of 2012, according to NPD Mobile Phone Track, sales growth has lagged behind product availability, the report noted.
In addition, the report found cellular data consumption is growing as smartphones get bigger, with consumers owning smartphones that have 4.7-inch and larger screens using about 4GB of data a month, twice that of consumers who own smartphones with smaller screens, and video is the top application driving this data consumption growth.
"Consumers watch more video on smartphones with larger displays, and this provides a tremendous revenue opportunity for network operators as their customers will need more cellular data to enjoy this content on the go," Brad Akyuz, director of NPD Connected Intelligence, told eWEEK. "As a result, operators allocate more shelf space to devices with larger screens, and encourage their device OEM partners to design devices with larger displays. Samsung’s Galaxy S franchise is a good example illustrating this trend as the OEM increased the screen size of the device in every iteration."
Larger smartphones have been more of a supplier push than a consumer pull, and suppliers plan to continue the increase supply.
Stephen Baker, vice president of industry analysis at NPD, told eWEEK that LG probably has been the most successful in the phablet category, although the company remains far behind Samsung, while Nokia, Sony and Huawei, who all have some large phablet size devices, are far behind.
"Apple’s strategy is sound and will create a stampede of U.S. customer interest in large size phones," he noted. "Already about 50 percent of the non-Apple sales in the U.S. are above 4.7 inches, so there is clearly demand. With Apple releasing something in the increasingly most important part of the market, they are likely to pick up share and force the rest of the industry to innovate to catch them."