According to analysts at Barclays Capital bank Apple will release the next edition of the iPhone franchise this August, the iPhone 5S, alongside a cheaper model aimed at developing markets.
The news comes from a Hong Kong based source, a tech blog named EMSOne, which reports two current Apple production partners – Pegatron and Foxconn – are currently manufacturing a entry-level iPhone ready for August release designed to secure Apple’s position in lower income economies. The story is also being carried by a Taiwanese newspaper, Commercial Times who report on the fears that a low cost iPhone might cannibalise on sales of the regular iPhone, thus decreasing Apple’s profitability.
The stats offered on the entry-level iPhone doesn’t make it seem particularly entry level by current standards, indeed it will apparently feature a 4.5 inch screen like the current iPhone 5 but will save money by having a polycarbonate case rather than the current glass and metal case that has been used since the iPhone 4 was released. The polycarbonate case will allow Apple to more easily release more colours, which the rumours suggest will be on offer. The phone is likely to be slightly bigger than a current iPhone due to a larger shell, giving it an appearance of a iPod Touch mixed with the current iPhone 5. The components are likely to be the same as the current iPhone 5, with the 5S seeing upgrades to key components like processor and camera.
Apple has had great success in large low income economies, especially China where there has been a rapid expansion of the middle class in recent years. But incomes are still low on an international scale and sales are slipping to cheaper Android devices. Apple’s position isn’t helped by it’s lack of support for China’s largest carrier, China Mobile, which uses an unusual bandwidth. Just last week we were greeted with news that Qualcomm have developed a chipset that would finally fix this incompatibility for Apple. Apple’s position would also be helped if they were open to alternative handset payment options, with recent rumours suggesting they may trial a regular payment system in India shortly.
Despite the Qualcomm news which would allow worldwide compatibility, the reports suggest that Apple’s low cost iPhone may be manufactured exclusively for the band used by China Mobile which sees very little usage elsewhere. The could be a deliberate policy to avoid the potential that consumers in austerity hit countries would opt for the cheaper model, depriving Apple of the super profits it currently gains from iPhone sales.
As with all Apple rumours, don’t yet put the date in your calendar - there’s been opposing rumours as recently as yesterday when Macotakara claimed it would be 2014 before a entry-level iPhone appeared. However the latest rumour does match up with previous reports on what the entry level iPhone would look like and the timeline KGI Securities released in January. While financial analysts have a reputation to maintain on the accuracy of their information, they’re as susceptible to feeds of false information as anyone and a lot could change between now and summer even if the current information is accurate.