There have been conflicting rumors about Apple’s next smartphone. One set describes a device that will be a significant upgrade, but a second says the next iPhone will be only marginally improved. An industry analyst thinks he has the answer: Apple is going to release both.
Chris Whitmore from Deutsche Bank predicts that Apple is going to release two models this fall. One of these will be the iPhone 5, the replacement for the current model. Unconfirmed reports say that this will have a larger display, faster processor, and a better camera than its predecessor.
Whitmore really goes out on a limb in his note to investors this morning by saying that Apple is also prepping the iPhone 4S, a device that will supposedly be sold unlocked and contract-free. He wrote, “With Nokia and RIMM struggling, the time is right for Apple to aggressively penetrate the mid range smart-phone market (i.e. $300-500 category) to dramatically expand its [total addressable market] and market share.”
The analyst thinks that this smartphone for the pre-paid market will sell for around $350 and include only minor enhancements over Apple’s current device, such as a faster processor. Such a device could be used with AT&T, T-Mobile, and any wireless carrier that supports SIM cards. Users would not be required to sign a service contract to use it.
There’s no doubt there is demand for such a device. T-Mobile USA revealed last week that there are over a million iPhones on its network, even though the carrier doesn’t offer this smartphone and it can’t be connected to T-Mobile’s 3G network.
The real question is, can Apple make a profit selling iPhones at such a low price, without a carrier subsidy and without any additional revenue from wireless service? The company offers an unlocked version of the iPhone 4 now, but this goes for a much higher price than Whitmore’s prediction: the 16GB version is $650, while the 32GB one is $750.
If Apple does release an unlocked version of the iPhone for under $500, it will definitely grow the iOS’s share of the smartphone market, which is now about half of the share of the rival Android OS.