Apple finds bigger is better when it comes to the iPhone, but iPad sales hit by shift to larger screens

SAN FRANCISCO (Bloomberg) - Bigger is turning out to be better for Apple Inc.'s iPhone.

A second blockbuster quarter of smartphone sales suggest the larger-screened iPhone 6 and 6 Plus, introduced in September, may help the company keep demand for the device alive for longer than previous models.

Apple sold 61.2 million iPhones in the period that ended in March, the device's second-best performance after the 74.5 million it sold in the prior three months, which included the holiday shopping season. IPhone sales blew past analyst predictions in both periods, helping fuel US$31.6 billion in combined profit for the past six months.

The newest iPhone models were designed with larger displays to woo consumers in China and other Asian countries. As people seek to upgrade to a bigger phone, they may choose an iPhone over a newer device from another manufacturer. The results underscore the importance of Chinese customers for chief executive officer Tim Cook's efforts to keep up sales momentum.

The strong showing "reinforces the notion that we're looking at a two-year bump for Apple," said Frank Gillett, an analyst at Forrester Research Inc. If consumers have a two-year replacement cycle, Apple "will capture a disproportionate share of people replacing their phones - they'll stem the losses of the people who had been jumping to get larger screens."

In the past three years, iPhone sales have fallen an average of 21 per cent in the fiscal third quarter from the second quarter. Even if unit sales drop by that amount in the current period, which ends in June, the resulting iPhone sales would rank as the fourth best for shipments in the product's history.

The bigger sizes "are driving robust demand for the most recent iPhone, a tailwind that should lengthen the runway of this product cycle compared to previous ones with increasing China revenue as another growth contributor," Daniel Ives, an analyst at FBR Capital Markets & Co., said Monday in a note to investors.

One casualty of Apple's shift to bigger-screened phones: iPad sales. Shipments of the tablets dropped 23 per cent to 12.6 million in the second quarter, a steeper drop than analysts projected.

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