Updated Jan. 24, 2014 12:56 a.m. ET
Facing competition from rivals offering smartphones with bigger screens, Apple Inc. AAPL -1.82% Apple Inc. U.S.: Nasdaq $546.07 -10.11 -1.82% Jan. 24, 2014 4:00 pm Volume (Delayed 15m) : 15.24M AFTER HOURS $547.23 +1.16 +0.21% Jan. 24, 2014 7:59 pm Volume (Delayed 15m): 245,864 P/E Ratio 13.68 Market Cap $496.42 Billion Dividend Yield 2.23% Rev. per Employee $2,127,850 01/24/14 Justice Department Urges Court... 01/24/14 Apple Eyes Move Into Mobile Pa... 01/24/14 Apple Pushes Deeper Into Mobil... More quote details and news » is planning larger displays on a pair of iPhones due for release this year, people familiar with the situation said.
The people said Apple plans an iPhone model with a screen larger than 4½ inches measured diagonally, and a second version with a display bigger than 5 inches. Until now, Apple's largest phone has been the 4-inch display on the iPhone 5.
Both new models are expected to feature metal casings similar to what is used on the current iPhone 5S, with Apple expected to scrap the plastic exterior used in the iPhone 5C, these people said.
The phones, expected in the second half, won't include a curved display, a feature recently introduced by rivals including Samsung Electronics Co. 005930.SE +0.62% Samsung Electronics Co. Ltd. S. Korea: KRX KRW1307000 +8000 +0.62% Jan. 24, 2014 3:00 pm Volume : 280,035 P/E Ratio 6.69 Market Cap KRW212850.94 Billion Dividend Yield 0.08% Rev. per Employee KRW2,485,940,000 01/24/14 Samsung Profit Growth Slows Sh... 01/24/14 Heard on the Street: Reprogram... 01/24/14 Key takeaways from Samsung's e... More quote details and news » , the people said. They cautioned that Apple's plans weren't final and that the company could change course.
The smaller of the two models is further along in development, and is being prepared for mass production, the people said. The larger-screen version is still in preliminary development, they said.
Apple declined to comment.
The plans for larger iPhones come as Apple is losing market share to rivals who offer bigger screens. Those models have proved popular as more people use the handsets to play games, watch video or surf the Web. Samsung's 5-inch Galaxy S4 and 5.7-inch Galaxy Note 3 are among its best-selling models.
Bigger screens are particularly popular in China, an important market for Apple's growth, where Chinese manufacturers offer smartphones with larger screens at a lower price than the iPhone. Apple this month started offering iPhones through the country's largest carrier, China Mobile Ltd. 0941.HK -1.10% China Mobile Ltd. Hong Kong $76.15 -0.85 -1.10% Jan. 24, 2014 4:01 pm Volume : 15.19M P/E Ratio 9.58 Market Cap $1547.90 Billion Dividend Yield 4.49% Rev. per Employee $4,065,060 01/20/14 Samsung to Face More Headwinds 01/17/14 China Mobile iPhone Packages N... 01/15/14 Apple CEO Signals Company Plan... More quote details and news »
"Apple definitely needs a larger-screen smartphone soon, particularly to address the demand in the emerging markets," said Canalys analyst Jessica Kwee. Canalys estimated that nearly one-fourth of smartphones shipped world-wide in the third quarter, about 60 million phones, had displays that were 5 inches or larger.
Apple last changed the display size of the iPhone in 2012, increasing it to 4 inches from 3½ inches. Apple has been widely expected to increase the screen size of its iPhone in future releases. The Wall Street Journal reported in July that Apple was testing larger screens for its smartphones and tablets. Bloomberg News reported in November that Apple was developing new iPhones with 4.7-inch and 5.5-inch displays that curve downward at the edges.
Apple's plan to scrap the plastic casing for its new models comes amid reports from suppliers that the company is scaling back orders for the 5C because of weaker-than-expected demand. The 5C, which was released in September, carries much of the same hardware specifications as its predecessor, the iPhone 5, but with colorful plastic cases.
Analysts have cautioned about reading too much into initial demand for the 5C because early adopters were expected to choose the more expensive 5S model. Demand for the less expensive 5C was projected to pick up after the holiday shopping season.
Apple reports quarterly results on Monday. Analysts expect iPhone shipments in the quarter through December to have increased more than 10% from a year earlier, boosted by strong demand for the iPhone 5S.
—Juro Osawa in Hong Kong contributed to this article.
Write to Lorraine Luk at lorraine.luk@wsj.com, Eva Dou at eva.dou@wsj.com and Daisuke Wakabayashi at Daisuke.Wakabayashi@wsj.com
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