According to a rumor (from Deutsche Bank analyst Chris Whitmore) that widely circulated yesterday, Apple may release two iPhones in September – the iPhone 5, as well as a spruced-up iPhone 4 called the 4S. A recent report from a BMO Capital analyst suggests otherwise, and provides some arguments to back up his position.
According to the analyst, BMO Capital’s Keith Backman, who provided a note along these lines to his investors, Apple will not be releasing any sort of “mini”, nano, or lower-cost models of the iPhone alongside the release of the iPhone 5. Instead, he claims that they will merely introduce a new handset with a modest spec bump, which will be largely similar in design to the iPhone 4.
Rather than releasing a separate, lower-cost phone, Bachman thinks that the iPhone 3GS will continue to serve as the “low-end” version of the iPhone, as he thinks that the bump from the iPhone 4 to the iPhone 5 won’t be substantial enough to bring the iPhone 4 down to $99 in cost.
The Argument For A Mid-Range iPhone
Whitmore alleged that the time is right for Apple to penetrate the midrange $300-500 phone category. Whitmore believes that an unlocked iPhone 4S with a $350 price tag and pre-paid voice plan could address people in lower income brackets, and reach countries and markets, such as Africa, Asia, and Latin America, that just cannot be reached by current offerings. She figures that such a move could significantly expand Apple’s market share.
The Counter-Argument – Why It’s Just Not Necessary
Releasing two iPhone models at once is unlikely for a lot of reasons. First, Apple arguable already has a mid-range iPhone – the iPhone 3GS, and soon (perhaps) the iPhone 4. These models are always available at lower costs, and address segments of the consumer market that can’t afford the latest phone. The only thing that would need to change to fulfill Whitmore’s idea is for Verizon and AT&T to release a cheaper (pre-paid), more limited plan for the device.
Additionally, Apple already offers an option for those who don’t want to submit themselves to a contract by offering the iPhone 4 unlocked for use on GSM networks starting at $650. A consumer could then use the device to access T-Mobile’s slightly cheaper rate plans.
In short, there would simply be no purpose to releasing a second, lower-powered iPhone alongside the iPhone 5 – it serves no purpose that can’t already easily be fulfilled without it, and it would lead to fragmentation in the iPhone experience to release two devices at the same time that had different hardware capabilities.
What are your thoughts on all this? As always, sound off in the comments!
