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Will Apple (AAPL) Get a Boost from a New OLED iPhone 8?

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There continues to be a lot of speculation about Apple Inc’s (AAPL - Free Report) next edition iPhone, dubbed as iPhone 8. It is special as it will be launched to mark the tenth anniversary of the first iPhone.

The phone is rumored to have features like a glass body, a dual curved edge-to-edge OLED display with a built-in Touch ID sensor, wireless charging and higher storage options. In short, Apple is expected to make a huge technological advancement with this new edition.

The first iPhone, launched in Jun 2007, was a revolutionary product that catapulted Apple to new highs. Back then, Apple co-founder and the then CEO Steve Jobs was quoted saying iPhone as a blend of three devices, namely, a "widescreen iPod with touch controls", a "revolutionary mobile phone" and a "breakthrough Internet communicator".

The company has a habit of maintaining secrecy regarding the new products. However, iPhone 8 has been creating a tremendous buzz, especially for the OLED screens.

Per media reports, iPhone 8 will be the first iPhone to support AMOLED (active matrix organic light-emitting diode) display. Also, the phone will have a big display screen at 5.8 inches. Media reports further add that the display will have a 2K set up and display ratio could be more than 2:1. OLED display will also boost the phone’s battery life. The leap in display technology, among other innovations, has prompted analysts to label iPhone 8 as a “super cycle.”

However, there is a catch. Reportedly, with the new features and new technology, Apple could price iPhone 8 as steep as $1,000 or more. A Forbes report quoted president of DisplayMate Technologies, Raymond Soneira as saying “Apple will likely set the OLED iPhone 8 price as high as possible for the limited quantity of OLED displays that they will be able to get from Samsung Display."

Will a $1000 priced iPhone Find Buyers?

Many analysts argue that the existing iPhone 7 and 7 Plus editions, with 256GB storage, carry price tags of $849 and $969, respectively. So a price tag of $1000 should not be considered as unreasonable for a fully redesigned limited edition OLED iPhone 8.

Plus, analysts also add that Apple can benefit by introducing a new SE offering at $400 or price the soon-to-be-released iPhone 7s and 7s Plus at a same price as the iPhone 7 and 7 Plus models. It is to be noted that Apple has launched SE versions to cater to cost sensitive markets like India.

We believe that in the near term at least, Apple’s fortunes are tied to its most important offering, iPhone. In Sep 2016, the company launched the iPhone 7 and iPhone 7 Plus handsets, which have been doing pretty well. To further push its advantage, the new iPhones were made available in more than 130 countries, representing the fastest rollout in the history of iPhone. In the first quarter, total sales of iPhone units were up 5% to 78.4 million. Considering the upgrade cycle trends, the company seems well placed to gain, especially in mature markets. In the past six months, shares of Apple have registered growth of 20.94% as against Zacks Computer Mini Industry gain of 20.66%.

For now, the launch of iPhone 8 has caught the fancy of one and all. If the speculations are correct and the iPhone marks a big jump in innovation, it is unlikely that people would be reluctant to shell out $1000 for the new OLED iPhone, boosting Apple’s top line.

At present, Apple has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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