Apple to Can iPhone 5 to Focus on iPhone 5S & Low-Cost iPhone, Korean Report

| Analysis

The Apple Crystal BallApple will be discontinuing the iPhone 4S and the iPhone 5 when it launches the next generation iPhone this fall...according to an unconfirmed report from Korean tech site etnews.com (Google translation). While we can't verify the provenance of the information, we like this rumor because it would make sense for Apple to take this path.

The significance is that Apple has historically kept the previous two generation of devices and used them to target the entry level smartphone market—though really, it's the entry level of the mid-range. Currently, Apple sells the three-generation old iPhone 4 for free with a two-year contract, the two-generation old iPhone 4S for $99 with a contract, and the iPhone 5 starting at $199 with a two-year contract.

Following that path, Apple would be expected to release the iPhone 5S this fall, and keep the iPhone 4S and iPhone 5 to fill the lower price points. If etnews.com has it right, Apple will ditch the two older generations and use a much-rumored "low-cost" iPhone alone to satisfy the lower ends of the market.

Apple has been rumored to be making a new entry-level iPhone model using plastic for the case and other methods to lower the cost. The idea is that Apple needs such a device to be more competitive in emerging markets, particularly the so-called BRIC nations of Brazil, Russia, India, and China.

We believe that Apple is absolutely going to release such a device, but we have long wondered how it would fit into Apple's pricing strategy. One option would be to eliminate either the iPhone 4S or the iPhone 5, and the other option is to eliminate both of them.

Eliminating both and focusing on just two new models makes for a simpler supply chain, and it also makes it far easier for Apple to position its products against the competition. Perhaps most importantly, it would make for easier decisions by consumers.

Under this scenario, Apple could offer a 16GB model "low-cost" iPhone for free in subsidy markets or $349 for emerging markets. A 32GB model could fill the $99/$449 position, while the iPhone 5S would start at $199/$649.

In addition to the reasons we cited above, etnews.com also said that the decision was based in part on the fact that the in-cell technology used for the iPhone 5's touchscreen is too expensive for lower-volume production.

Eliminating both the iPhone 4S and iPhone 5 would also remove the last 30-pin iPhone dock from store shelves, unifying the platform on Apple's Lightning connector.

In summation, we have no idea if etnews.com has it right, but the story fits and it would be a logical choice for Apple to make.

[Via MacRumors]

[Update: This article originally identified etnews.com as a Chinese site. It has been corrected to show that the site is Korean. Thanks to an unnamed astute reader for catching it. - Editor]

Comments

Lee Dronick

I am not sure that it would be a good idea, it would be the first peal in the death knell of Apple. Sell the old models in those countries and keep the cachet of being ahead in the race to the top.

Intruder

Ahhh, I can hear it now from all the android fans:

“See? The iPhone 5 was such a failure that they killed it! Told you so!”

RonMacGuy

LOL.  And, don’t forget, “See?  They copied Samsung by releasing an iPhone with a plastic back! if Apple can patent the rectangular shape of a phone, surely by now Samsung has patented the plastic smartphone back.  Epic fail!!”

geoduck

I like this idea. It’s always seemed a bit, awkward perhaps, that you could buy the latest model or if you were tight on cash had to settle for last years model. I’ve felt like there might be a bit of a stigma, even subtly in that. If this comes to pass, you would be able to get an iPhone, or for a few bucks more an iPhone Pro (to pick names out of thin air). Both would be “current” models. Both would have the same cachet. It would be like the Macbook Air and the MacBook Pro, or the iPad Mini and the iPad. Each pair is the newest model, even if inside one is a bit further along the technical curve.

sym

RONMACGUY - up to and including the iPhone 3G S, iPhones were PLASTIC.  Samsung has real patents, like the one the UNITED STATES ITC enforced by issuing a final decision to ban older iPhones and iPads.  Nice straw man, though.  Seriously, is the MacObserver like the Fox News of tech??

Garion

“Eliminating both and focusing on just two new models makes for a simpler supply chain, and it also makes it far easier for Apple to position its products against the competition. Perhaps most importantly, it would make for easier decisions by consumers.”

Exactly!  I believe this is the essence of Apple’s decision to replace both the iPhone 4S and 5 with the new plastic iPhone 5C. It really does make a lot of sense when you think about it. It addresses both the problem of Apple’s falling gross margins due to low priced but hard-to-manufacture metal iPhone 4S and iPhone 5 AND it targets the emerging markets with an affordable priced NEW iPhone with still up-to-date technology inside. I’m all for it.

Pashtun Wally

I came to the same conclusion on my own this week, yet I am expecting iPhone 6, not 5S.  As I observed in John Martarello’s recent Mac Pro post, Now is not the time to hang back shyly - I expect Apple to come out blazing…and unquestionably own the smartphone market all over again.

Haters will, of course, hate, however….

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