Apple 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.
[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]