June 27, 2011

Two New Apple Phones for the US Makes No Sense

Zach Epstein, writing for BGR:

"Apple will release not one, but two new iPhone models this September, Deutsche Bank analyst Chris Whitmore wrote in a note to investors on Monday. The Cupertino-based tech giant has a new iPhone 5 model lined up to replace the current iPhone 4, but it also has the rumored “iPhone 4S” in the works — a supposed modest upgrade that will maintain the same physical design as the current iPhone model. The 4S model, Whitmore believes, will launch as a $349 prepaid phone with a data plan that works much like the iPad Wi-Fi + 3G; users will be able to choose from multiple data plans and purchase them on a monthly basis without being locked into a contract."

The first device isn't surprising. When Apple didn't unveil new mobile phone hardware at June's WWDC conference, but rather previewed the next version of their OS products and iCloud service, we could infer a likely delivery date for the next-generation iPhone: this fall, when iOS 5 ships. The new phone should arrive with the new OS installed. I don't know which is pacing the delivery schedule, but my guess is that Apple wanted to rotate the iPhone delivery schedule forward in the year, to coincide with the beginning of the holiday buying season.

The second device is questionable. There have been rumors (Jim Dalrymple for The Loop) of an iPhone 4s making the rounds for much of this year. A pre-paid, lower-priced iPhone 4 only makes sense for markets that cannot get the iPhone because there are no carriers willing to subsidize the purchase price. The original story (Philip Elmer-DeWitt for CNNMoney) cites Africa and Latin America as two of them. Into those markets, selling an updated, unlocked (not tied to any particular cell carrier) iPhone 4 for $349 makes sense.

But Apple is already selling unlocked iPhone 4 phones here in the US, for $649. It makes no sense that they'd undercut their own profit by offering an updated phone for half the price. That's backwards.

My take: look for the iPhone 4s, if there is such a beast, to sell in those markets mentioned in the report, not here in the States.