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Apple Needs to 'Pull an iPad' on Its iPhone

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This week marks the release of the next step in the tablet market. An undeniable leap in custom technology and user interface. A revolution of form and function that surpasses flailing industry competitors and plasters a smile on everyone who comes across it.

Yes, this week RIM (RIMM) releases the $120 keyboard accessory for its $200 BlackBerry PlayBook -- converting the universally beloved tablet into a stylish laptop.

No, of course I'm speaking of tomorrow's launch of Apple's (AAPL) new iPad. As early reviews continue to pour in, the device is earning almost unmitigated acclaim and accolades across the board -- a feat that no Android (GOOG), Windows (MSFT), or yes, BlackBerry tablet to date could hold claim.  What initially appeared to be an incremental upgrade to the iPad 2 is now seen as a fairly substantial revamp with improved CPU, GPU, memory, apps, and -- thanks to Verizon (VZ) and AT&T (T) LTE networks -- wireless speeds.

But above all, the new Retina Display is garnering the lion's share of praise. Boasting a 9.7-inch, 2048 x 1536 resolution screen, the third-generation iPad was described by The Verge's Joshua Topolsky as "easily the most beautiful computer display [he has] ever looked at," and that it was like looking at a "glowing piece of paper." Minyanville's Michael Comeau claimed the new iPad screen alone is "propping up the stock market."

So seeing as how Apple is capable of dynamic improvements to its iPad screen, it's about time the company does the same for the iPhone. Not in resolution, but in size.

A recent study conducted by Strategy Analytics shows that a whopping nine out of ten users prefer a larger screen size. Speaking with consumers in the US and UK, the majority gravitate toward screens in the 4-inch to 4.5-inch range -- provided that the device also is thin.

Paul Brown, Strategy Analytics' Director of User Experience Practice, said, "Almost 90 percent of existing smartphone owners surveyed chose a prototype smartphone with a display larger than their current device." Adding, "This trend is driven by increased mobile web browsing capability, as well as engaging video and gaming experiences."

As it stands, Android already boasts some of the larger-screened smartphones on the market. Motorola's (MMI) Droid Bionic sports a 4.3-inch screen, the HTC Sensation 4G also hits 4.3 inches, and Samsung's Galaxy Nexus is among the largest with a 4.65-inch screen -- though the latter's phone-tablet hybrid Galaxy Note rocks a 5.3-inch display. Comparatively, the iPhone 4S is downright diminutive with a 3.5-inch screen, which is over an inch smaller than the Galaxy Nexus.

As shown in Strategy Analytics' study, the demand for a screen over four inches is clearly there. Consumers want a larger view of websites, video, and gaming, and -- given what the company accomplished with the iPad -- Apple is certainly capable of delivering the size increase, possibly while maintaining the iPhone's superior 326 dpi. Its unmatched perfectionism in form factor could also allow a thinner device while increasing the screen size. After all, Motorola accomplished that feat with the Droid RAZR and RAZR MAXX.

While there is something to be said for pocket portability and battery drain, a larger-screened iPhone 5 would be a huge hit for the majority of users and certainly shake up the market in the same way the new iPad is about to.

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POSITION:  No positions in stocks mentioned.