Apple iPhone 5 To Feature Bigger Screen; Production To Begin In June For Fall 2012 Release Date [REPORT]

By Dave Smith | May 16 2012 4:52 PM

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Apple iPhone 5 To Feature Bigger Screen; Production To Begin In June For Fall 2012 Release Date [RUMORS]

According to sources from within Apple's foreign supply chains in Hong Kong, Apple has ordered "bigger screens" for its next iPhone, presumably called the iPhone 5, even though no exact measurement was provided. Production on the iPhone 5 is said to begin next month, while the release date has been scheduled for sometime in the fall, likely around October. This concept, developed by Federico Ciccarese, shows what a 4-inch iPhone 5 would look like next to an iPhone 4S (pictured on the right).

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Gap profit falls 14 percent as consumers cut personal budgets

Gap Inc., the apparel company that owns Gap, Old Navy and Banana Republic posted a profit of $215 million, down 14 percent from a year earlier.

The San Francisco based company a year earlier posted a profit $249 million or 34 cents a share. Despite the reduced profit, it still beat analyst predictions of 30 cents a share by earning 31 cents a share.

Earlier this month, Gap reported net sales dropped 7.4% to $3.13 billion, as sales at stores open at least a year fell 8%. Same-store sales were off 13% at Banana Republic, while Gap and Old Navy saw declines of 12% and 3%, respectively. International sales fell 4%.

Glenn Murphy, Gap Inc.’s chairman and chief executive, said in a statement that he was “particularly encouraged” by Old Navy’s performance and that Gap Inc. was focusing regaining market share across all its brands.

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Dollar, Yen strengthen on Japan’s negative outlook, Middle East violence

Escalation of violence in Libya extended rally of safe currencies as the Dollar and Yen rose against most currencies along with the Gold and Crude Oil although Japan's credit rating downgrade by Moody's saw some weakness creep into the Yen but the slide could be limited as S&P maintains the same outlook. EURCHF dropped to a two-week low of 1.2873 as EU investors sought the Franc as a refuge against a falling Euro, EURUSD traded at 1.3564 from yesterday's high of 1.3709, NZDUSD and NZDJPY dropped the most in three months to 0.7489 and 62.42 respectively after an earthquake measuring 6.3 struck Christchurch while USDJPY traded at high of 83.54 and EURJPY traded at a low of 112.88. The Middle Eastern crisis could continue longer, leading to weaker demand for high-yield currencies with the Dollar and Franc benefiting and the Euro continuing to be sold-off, Gold traded at a high of $1404 and Oil extended its rally to high of $97.60 on fears of oil disruptions as Libya is Africa's largest oil producer.
Asian stocks declined on speculations that political uncertainties in the Middle East will derail global economic recovery and as Moody's downgraded Japan's AA2 credit rating outlook to negative from stable on concern the government won't do enough to address the nation's debt burden. The MSCI Asia Pacific index dropped 1.8%, Nikkei dropped 1.8%, the first decline in seven days, Hang Seng dropped 1.9%, Shanghai Composite dropped 2.43% on fears rising oil prices could slowdown the economic recovery process as it could tax consumers and major airlines could suffer and earnings outlook could be lowered while the Topix index led the biggest drop since September by 1.8%.
Yesterday's ECB Stark said in a speech that the ECB is prepared to act quickly and decisively on inflation if necessary although it is to be decided whether the jump in inflation is temporary or would continue to increase in a projected manner adding that another round of easing could set aside ECB's future plans. His comments also suggested that ECB's bond purchase program could remain in place for some time to come which could add some support to the Euro as nations battle increasing budget deficit issues.
Today's calendar would show UK public sector borrowing figures, Canadian Retail Sales, US house price index which could show further decline in prices, Consumer confidence, manufacturing from Richmond area and Fed's Kocherlakota speaks today.

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Pricey Eats

From all accounts it appears that the world is in the early stages of a major leg up in food prices. The major macroeconomic trend will likely drive economic policy and the investment outlook for years to come. Although mainstream pundits like to focus on cyclical drivers like the weather, the real force behind the move is secular. The U.S. is leading the world in a pandemic of monetary inflation that is helping to cause commodity prices, food in particular, to skyrocket across the globe.

The Federal Reserve's monetary excess is currently being magnified by China's misguided currency peg policy. As the United States debases its currency through excess printing, China must follow suit. In order to maintain a consistent relative valuation, China must adopt the monetary policy of the United States.

Just last week, China announced that in the 4th Quarter 2010 its foreign currency reserves leapt by $199 billion to $2.85 trillion. The increase was much larger than economists expected, and suggests that China is printing as much as $2 billion worth of RMB per day in order to buy dollars to maintain the peg. The big problem is that China, with a booming economy, is adopting a monetary policy of an economy that is contracting. This is the perfect recipe for inflation.

And it's not just China that is enforcing a currency peg. Many other countries intervene in the forex market when they feel their currency has risen too high against the greenback.

For example, the Chilean currency gained 17% in value against the USD in just 7 months during 2010. The surging currency underscored the country's status as an emerging markets success story. But that condition abruptly ended last week when Chile's central bank pledged to intervene in the local currency market by increasing foreign currency reserves by $12 billion in 2011. After the announcement, the currency predictably dropped against the dollar and caused a major sell-off in Chilean equities.

The specious idea behind this action is that foreign governments believe that by keeping their currencies cheap they can bolster exports and maintain a strong economy. But a rising currency does not necessarily restrain exports. If those countries currently committed to pegs were to reverse course, their problems with local inflation could diminish. And those lower prices could offset to a certain degree the decreasing purchasing power experienced by the importers of those countries' domestic goods.

However many countries fail to understand this basic economic concept and fail to see the forest for the trees. By stubbornly clinging to the belief that a rising currency is bad for the economy, world economic leaders are helping to unleash a wave of inflation.

Typically, food prices are more volatile than prices for finished goods. It is there that this new wave of inflation is first manifested. Unfortunately, this means that the poorer people around the world, who pay a higher percentage of their income for food, will bear the brunt of the pain. A quick look at some alarming movements in food prices should give you a sense of how bad things are getting:

Sugar was up 25% in 2010.
Corn and wheat were up 53% and 49% respectively in 2010.
Soybeans were up 28% in 2010.
In December, the U.N.'s Food Price Index, which covers dairy products, meat, sugar, cereals and oilseeds, jumped an alarming 4.2% from the previous month. In so doing the Index passed the previous peak set in June 2008.
India's food price inflation rose to a one-year high of more than 18% according to data released in early January. Rising food and energy prices in India have convinced many analysts that the Indian central bank will raise rates later this month.
In China, food prices rose 11.7% from January to November 2010. In response, several cities have implemented direct controls to limit food price increases and the central government has vowed to eliminate speculation in the country's commodities markets.

Of course, global currency depreciation has also caused other commodity prices to rise. Food production is extremely energy intensive, and $90 per barrel oil has helped push food prices to new all-time highs.

The surging cost of fertilizer, driven in large part by U.S. ethanol policy, is also adding another driver to rising food costs. According to the EPA, ethanol sales in the United States are expected to rise to 13.9 billion gallons in 2011 from 12.95 billion gallons in 2010. The agency is requiring that renewable sources account for at least 8 percent of motor fuels sold in 2011. Congress is requiring that U.S. annual ethanol production increase to 36 billion gallons by 2022. With nearly 40 percent of the U.S. corn crop currently diverted to ethanol, the demand for fertilizer is likely to increase substantially.

Prices are already on the move. Mosaic, one of the country's largest fertilizer corporations, sold diammonium phosphate for $461 a metric ton in the fourth quarter, up 61 percent from a year earlier.

Admittedly, there are other non-inflationary factors that are boosting global food prices. For instance, poor weather conditions in major exporting countries across the globe have significantly curtailed harvests and expectations. And alongside bad weather in Australia, Europe, North America ,and Argentina, rising Asian demand is at the heart of the spike. China, for example, is expected to buy 60 percent of globally traded soybeans in 2011/12, which is double its percentage of four years ago.

But the genesis of soaring food costs lies at the feet of Ben Bernanke and his desire to re-ignite inflation domestically. However, countries like India and China have already started to reverse the inflationary effect of linking their currencies to the USD and are raising banks' reserve requirements and interest rates. Contrast those actions with those of our Fed chairman who has repeatedly stated that inflation in the U.S. is far too low. We can only hope Mr. Bernanke repents from his love affair with inflation before food riots land on U.S. soil.

In the meantime U.S. investors can help mitigate their exposure to rising food costs by perhaps looking to invest in those firms whose financial performance improves with rising food prices.

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Market Moving News: GBP/USD - Apr 29

Gbp/usd - 1.4710...Stops at 1.4695/00 have been taken out in Asia on buying fm st specs (who also bought gbp/jpy) with some appetite for risk returning on the back of the firmness in regional equities. Offers are noted at 1.4740/50 with stops likely to emerge abv 1.4770/75. On the downside, buying interest fm various accounts (incl. European names) are reported at 1.4640/50 n further out at 1.4600/10...

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EUR/GBP - Euro British Pound, European Session - 29/04/09

0,8973. EUR GBP moves without trend and swings around exponential moving averages (EMA 50 and 100). The volatility is high. Bollinger bands are flat. Oscillators are neutral. The price should continue to move in 0,8890 / 0,9020 range.

Resistances: 0,8990 - 0,9020
Supports: 0,8950 - 0,8890

It's been long-rumored that Apple's sixth-generation smartphone, presumably called the iPhone 5, would feature a bigger screen than its predecessors. The latest report from the Wall Street Journal only confirms these rumors: According to sources from within Apple's foreign supply chains in Hong Kong, Apple has ordered bigger screens for its next iPhone, even though no exact measurement was provided.

The sources said the new screens measured at least 4 inches diagonally, compared to the 3.5-inch screens on every prior iPhone model, dating all the way back to the first iPhone, which was introduced in 2007. Apple is reportedly working with a number of screen manufacturers in Asia, including Sharp, Japan Display (a merger of Sony, Hitachi, and Toshiba's display businesses) and LG Display, but the quality of the screen (LCD vs. OLED) is also still unknown.

People want thinner and lighter smartphones, but bigger screens seem to be in fashion. Samsung, Apple's biggest competition, continues to make its smartphone screens bigger -- its latest phone, the Galaxy S III, has a 4.8-inch screen, compared to the 4.3-inch screen on its predecessor, the Galaxy S II. While Apple may not be building a screen of this magnitude, it certainly seems like the Cupertino, Calif-based company is ready to challenge itself with a screen bigger than 3.5 inches.

Apple would benefit from a bigger iPhone screen in several ways: For one, it would be able to build a bigger and more beautiful Retina Display, but more importantly, it could market the iPhone 5 as the biggest iPhone experience yet.

Apple recently proved that it knows how to make Retina Displays for different-sized devices beyond a 3.5-inch iPhone screen. Retina Displays, for those who don't know, are displays where the individual pixels are packed so close together that the human eye cannot distinguish them. In the new iPad, released on March 16, Apple upgraded the iPad 2's 1024 x 768 LCD display into a 2048 x 1536 Retina Display, keeping the chassis almost exactly the same. This impressive feat required a breakthrough in technology:

Apple figured out how to pack even more pixels into a display, and here's how it works: A pixel is made of red, blue and green subpixels, and a separate signal tells each subpixel when and how much to light up. This is what creates colors on a screen. Apple wanted to shove four times as many pixels into the same space, but learned that by doing this, the signals can easily get crossed, which results in fuzzy and distorted images. Apple needed to solve that particular problem, and eventually discovered that by elevating the pixels onto a plane separate from the signals, the signals don't get crossed, and the images look crystal-clear.As a result, Apple's new iPad packs in 3.1 million pixels, which is about 1 million pixels more than an HDTV.

While Apple will not need to pack in this many pixels into an iPhone screen, the company is now extremely confident it can make Retina Displays for most handheld screen devices, which is why there have been more rumors of iPhones and iPads of different shapes and sizes.

The Wall Street Journal said that production on the iPhone 5 will begin next month, while the release date has been scheduled for sometime in the fall, likely around October. Up until last year, each iPhone was released during the summer months roughly one year apart, but the iPhone 4S -- the latest model -- was released in the fall. While there is no clear reason for this, analysts believe Apple attempted to implement LTE into the phone, and failed.

The first implementations of LTE, which is characterized by significantly higher download and upload speeds compared to 3G networks, ravaged battery life of smartphones, which was a key complaint from uers. Apple wanted the fastest networks for its customers, but the only way to fit LTE into the iPhone 4S would've been to increase the thickness of the iPhone to accommodate a larger circuit board, and a bigger battery to power everything. Apple CEO Tim Cook, in a company earnings conference call in April 2011, said first-generation LTE chipsets force a lot of design compromises.

Fortunately, Qualcomm recently unveiled the fifth iteration of its new chip, which supports TD-SCDMA, TD-LTE, HSPA+, EV-DO, embedded GPS, and LTE on TDD and FDD networks worldwide. The chip works with Android and Windows 8 devices, but there's a high degree of likelihood that this will be the same chip inside the iPhone 5. Yet, the chip was only released in February, so Apple likely needs ample time to test the LTE chips inside the iPhone 5 before they're implemented.

A Bigger Screen Vs. A Better Screen

Apple has reportedly been busy testing prototypes of the iPhone 5 with an A5X chip, which is the same quad-core graphics processor that powers the Retina Display in the new iPad. But why would Apple want such a powerful chip for an iPhone? Given that the A5X chip is a graphics powerhouse, if Apple doesn't drastically change the physical size of the screen as the Wall Street Journal predicts, it could change the display's overall quality and shift from LCD to OLED.

LCD used to be one of the cutting edge technologies, but it is now a commoditized business, said Jasper Kim, founder and CEO of Asia-Pacific Global Research Group. It can be replicated and reproduced easily.

On April 4, the Korea Times reported that Apple was interested in switching from LCD to OLED displays for its next round of iPhones and iPads.

OLED displays have been gaining traction, as the technology can produce richer colors and better pictures in limited amount of space -- think of large, gorgeous TV displays thinner than a pencil. Samsung has not widely implemented OLED across its production lines, but the company is considering expanding the technology to compete with LG Electronics, which wowed audiences at CES 2012 with its large wafer-thin OLED TVs.

Thanks to the increased volume, chances have been raised to ship Samsung's OLEDs for Apple's iPads and even iPhones, said The Korea Times, citing unnamed Samsung executives who spoke on the condition of anonymity.

Apple has plenty of money to afford OLED screens in an iPhone-sized display, and it would make sense for Apple to ask Samsung -- the world's leading display maker, and Apple's biggest client -- to help build its iPhone 5 displays. Samsung knows how to build big, beautiful screens for any size device: Just imagine what Samsung could do with Apple's Retina technology implemented into an OLED. Apple would effectively put distance between the iPhone and all other smartphone competitors for another five years, at the very least.

Other Possible iPhone 5 Features

Crack-Proof Glass. Apple's patent for crack-resistant glass, granted on Nov. 15, uses the same alumino silicate glass solution used in the iPhone 4 and 4S, but chemically treats it with potassium and sodium ions to achieve greater compression thresholds on the surface and edges of the glass, making it less susceptible to cracks.

Apple also included a handy feature that will appeal to everyone who's ever dropped their iPhone: The patent calls for a shock mount to be placed between the glass and the body of the device, which will instantly inflate if the device senses it's falling. If the iPhone's internal accelerometer senses it's falling, an actuator within the device sucks in the cover glass as it accelerates to the ground, protecting it from damage.

Advanced Haptics. Another recently published Apple patent describes a new haptics feedback system that allows a user to interact with the content on the screen by touching it, which is accomplished with sensors and actuators working simultaneously. The new multi-tiered system is extremely sophisticated: Using several layers of elastic screens stacked on top of each other, Apple's screen can produce 3D buttons or objects to interact with, as well as give texture to images, like topographical maps.

Apple's haptic system can create different types of actions, including vibration, net displacement, bending, deforming, or any combination of those elements. The technology can also work with a secondary display screen or audio system, which would be useful if Apple ever builds its iTV, but the system can also be applied to flexible organic light emitting diode screens, or OLED screens. This advanced haptics system would also work with almost every portable Apple device, including iPhones, iPod Touch devices, iPads, MacBooks, and even TVs, video projectors, and e-Ink displays.

3D Photography. While existing 3D cameras and video recorders can gather three-dimensional information from objects, they're generally incapable of getting detailed enough information in relation to the shapes, surfaces and depth of the objects. Apple's solution involves a series of systems, tools and methods to capture a 3D image by using multiple sensors and cameras. One sensor would capture a polarizing image, while two other sensors would capture two different non-polarizing images, and Apple's system would combine the images into a composite.

3D Object Recognition. On May 10, the U.S. Patent and Trademark Officepublished a series of Apple patentsrelating to 3D face and object recognition technology. Apple's system involves taking a picture -- either with a front or rear camera -- and the 3D recognition software would distinguish between the two-dimensional projection of the image and the three-dimensional shape of the objects in the image. The process would be fully automatic, which would help for identifying faces in a group of objects, or even identifying objects in X-ray images.

Apple Avatars. If you want to buy movies, apps, or any content through Apple's iTunes Store or App Store, Apple requires you have an Apple ID. Your Apple ID sticks with you in the company's Game Center, which keeps track of a user's achievements across purchased and downloaded games. But if this recently-granted patent has any bearing on the immediate future, Apple users may soon get to make customizable Apple Avatars, which users would use to represent themselves within potential online or gaming environments. Apple users could create a 3D model of themselves, customizing features like hair, eyes, nose, and eyebrows, as well as other features and accessories. While avatars seem to be geared towards kids, it would actually help give users a source of identity while making the Apple brand -- and identification procedures -- a little more fun. Don't be surprised if Apple had Pixar's help on this one: Just look at the eyes.

NFC. Near-Field Communication is nothing new: in fact, many current smartphones have the chip built-in so owners can use mobile payments solutions like Google Pay. Apple has held off on implementing NFC technology into its iPhone, but a slew of recently granted patents seem to suggest that will change with the sixth-generation iPhone. Two of the major features said to use NFC rather heavily are the iWallet, and iTunes Gifting.

The iWallet. Apple won a major patent on March 6 for a piece of technology called the iWallet, which is a digital system that gives users complete control over their subsidiary financial accounts on their iPhones, and also leverages Near-Field Communication technology to complete credit card transactions directly on the phone as well. The iWallet has many different features, including giving users the ability to see their entire credit card profiles, view statements and messages from their banks, and even set parental controls for their children, should they also want to use their iPhones as digital wallets. Outside of the iPhone, users can keep track of their payments and statements within the iTunes billing system, which keeps credit card information and records safe and secure. There's a possibility that iWallet could also work with other Apple utilities, which could allow users to buy things like movie tickets directly within the apps, but only time will tell with that one.

iTunes Gifting. While downloading and storing digital media with online service providers has become commonplace -- more so than purchasing DVDs and CDs at physical retail stores -- it's not very easy to transfer digital files from one individual to another, usually because of copyright laws. Apple believes it has a solution to this issue: A gift-giving platform where users have a standardized way for buying, sending and receiving media files from a media provider (iTunes) between multiple electronic devices (iPhones, iPads and iPod Touch devices). The process is simply called, Gifting.

One method for gifting requires the sender to authorize a gift charge to their iTunes account, which is then transmitted from the sender's device to the receiver's device -- via tapping, or as long as they're nearby -- thanks to the NFC chip. If the recipient of the gift isn't nearby -- or you want it to be a surprise -- the gift-giver may submit an official request with iTunes, which then processes the request and charges the initiator's account for the given file. The patent also allows for multiple gifts to be sent in a single transaction, as well as certain customization options for the gifts -- including voice greetings and custom gift images, likely to conceal the gift's identity before the receipient opens it.

Multi-Player Gaming. The iPhone 5 might also be the first phone to feature a new piece of software for multi-player gaming. On March 15, the U.S. Patent and Trademark Office published a patent application from Apple that describes a system for multi-player gaming, which allows groups of people to play the same game together and even see it from different perspectives according to the devices' physical relation to one another. The system actually mimics that of the Find My Friends app, in which a user's device detects other nearby devices that it recognizes as friends, and invites them to all join a common application. The technology also determines the relative position of those devices, so some games -- like turn-based role-playing games or card games -- can be played in a specific order.

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Will you buy Apple's next iPhone? Does the name matter to you, if it's called iPhone 5 or iPhone 4GS? Which is more important to you, the size of the screen or the overall quality of the display? Let us know in the comments section below.