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Ahead of Rumored Larger iPhone From Apple, 40% of Chinese Consumers Prefer Phablets

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A new report from Kantar details just how much the market for bigger screens is growing.

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Rumors of a larger-screened Apple (NASDAQ:AAPL) iPhone have reached a fever pitch, and according to a new report from Kantar Worldpanel ComTech, the company's timing may be pitch-perfect. The new report, released this morning, found that 40% of all smartphones sold in China in March 2014 had a screen larger than 5 inches (measured diagonally), which is typically considered the maximum size of a standard smartphone. Once they're between 5 and 7 inches (the size of small tablets), devices enter "phablet" territory.

So why exactly are phablets so popular in China? According to the Kantar report, consumers are using phablets more and more for personal entertainment.

"It's clear that phablets really are changing the way Chinese consumers use smartphones," said Dominic Sunnebo, Kantar's strategic insight director. "More than one in five phablet owners now watch mobile TV on a daily basis; half do so at least once a month, and this is without widespread availability of 4G."

This market growth isn't isolated: Earlier this year, Juniper Research released a report, stating expectations that 120 million phablets will be shipped worldwide by 2018, and that last year 20 million were sold. (Note: Juniper considers a phablet to be a phone 5.6 inches or bigger measured diagonally.)

Not surprisingly, another market where phablets are hugely popular is South Korea, home to Samsung (OTCMKTS:SSNLF), the market leader in phablet production. As of August 2013, 41% of smartphones sold in that country ranged from 5 to 6.9 inches (during the same time period, the worldwide percentage was 7%). In both Chinese and South Korean markets, Apple stands to make gains with a phablet of its own. 

This morning's report from Kantar also touched on the possible economic boon to wireless carriers that phablets could soon usher in. As more users opt for larger screens, those users consume more and more digital content on their phones. Sunnebo believes that Chinese wireless carriers will see increased revenue as users upgrade for higher-capacity and more expensive plans. The analyst also drew attention to the fact that Apple users tend to be voracious consumers of mobile data. "As 4G infrastructure expands in China, the demand for data is going to be unprecedented, paving the way for carriers to boost revenues significantly through larger data packages," he said.

Until now, phablets have been far more popular in China than in the US. In China, Google's (NASDAQ:GOOG) Android is by far the dominant operating system, with an 80% market share as of March 2014 (Apple takes 17.9%). In the US, Android and iOS are on more equal footing (57.6% and 35.9%, respectively). Given that most phablets run Android OS, a major percentage of American consumers loyal to Apple have not yet experienced the bigger-screen phenomenon. This year, it's looking like they'll finally be able to buy their own phablets, and that Apple may be able to take back some mobile market share.

Follow me on Twitter: @JoshWolonick and @Minyanville

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