The iPhone 5 is Dead. Long live the New, Colorful, Low-Cost iPhone 5!

AppleInsider had an article today discussing the rumored "low-cost" iPhone. According to their sources at KGI Securities, the new low-cost iPhone will have the standard iPhone 5 form factor and 4-inch screen, with a "super-thin casing made of plastic and glass fiber".

That makes sense. Assuming this is true, it also gives us a huge clue about how Apple intends to balance their position as a "high-end" phone maker with the introduction of a low-end model.

She's a Rainbow

The photo below isn't an official mock-up - it's from Anostyle's iPhone customization kit. But you get the general idea.

Even leaving the "low cost/emerging market/marketshare grab" argument aside, this does appear to be the standard, well established Apple protocol:

First, a device comes in one color only - white or black.

In the next generation, the other color is offered. Black iPods!? White iPhones!

In the next generation, a wide spectrum of colors is offered. A whole rainbow of Nanos!

The fact that they're able to repeat this trick on different product lines, while still keeping us "surprised" when they do it, is actually kind of impressive.

"Low-Cost" iPhone? Or Redesigned iPhone 5?

I've resigned myself to the fact that Apple is, apparently, going to introduce a low-end iPhone alongside the iPhone 5S later this year.

And I think that the reason they're doing this is exactly what's been reported - they're hoping to sell an iPhone at a non-contract price that is palatable in emerging markets.

But - here's my speculation - I don't think they're going to call it a "low-cost iPhone", or an "iPhone LC".

They're going to market it as "The New iPhone 5".

And the current iPhone 5 will disappear from stores entirely.

This will mark a departure from the current iPhone product lifecycle, in which a phone starts out at $199, while prior year's model (currently, the 4S) moves to $99 on contract, and the model from 2 generations prior (currently, the iPhone 4) becomes free with contract.

Tim Cook will take the stage at the next iPhone event, and he'll announce the iPhone 5S. It will look exactly like the current iPhone, but will have a faster processor, a better camera, and so on.

He'll then introduce something special - the iPhone 5 will be dramatically decreasing in price - available for, say, $300-350 off-contract. AND, it's going to be available in a wide spectrum of colors!

Component-wise, this makes the next-gen transition a lot easier for Apple - every bit of the existing iPhone 5 assembly would continue to be used.

The iPhone 5S will use the existing iPhone 5 exterior, with a spec bump for the internals.

The "New iPhone 5" will use most of the existing iPhone 5 components, with a newly designed (and substantially cheaper, and maybe a little bit bigger) colored plastic exterior. (And potentially some cost-cutting elsewhere.)

The balancing act

Presumably, Apple will still be able make money selling the current iPhone 5 as a low-cost "new iPhone 5".

That will put Tim Cook's supply-chain wizardry to the test - these will be the internals that were the flagship model just a year prior. Can they really shave a couple hundred dollars from the component/assembly cost, just a year later?

And at the same time, the iPhone 5S will need to offer something truly interesting that the "New iPhone 5" cannot, or they risk cannibalizing their greatest product. A fingerprint sensor? NFC-enabled Passbook? iRadio?

I've come around on the idea of a low-cost iPhone happening... primarily because there's so much smoke out there, something must be burning.

I still think that the introduction of this product is a radical departure from Apple's recent business model - and so potentially problematic - that it could make or break Tim Cook's tenure as CEO.

Let's hope that it's his first real home run.


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