Excitement over the new iPhone is building to a frenzy this week as rumors abound that Apple (
AAPL) will unveil upgraded models on September 10.
That would be almost exactly a year after Apple
introduced the iPhone 5, which grabbed the title of best selling smart phone model in the world last year.
Apple isn’t commenting on new models yet but the September 10
introduction date has been confirmed by major news organizations
including
the Wall Street Journal’s AllThingsD and dedicated Apple bloggers
such as Jim Dalrymple.
The rumored new handset, expected to be called the iPhone 5S, will
probably look quite similar to the current model 5 but is sure to be
lighter and more powerful than ever. It may also be accompanied by a
lower-priced, plastic-cased model, dubbed the iPhone “5C” on the
Internet.
Pictures leaked onto the Web of the purported lower-priced iPhone
show an array of bright colors instead of just the same old black and
white models available in recent years. That would make 2013 a banner
year for colorful phones, as the new Google (
GOOG) Moto X phone arriving in stores in a few weeks
is being offered in 18 colors.
A rising share price
And it's not just customers who are excited about a new iPhone.
Investors have been driving up Apple's share price — even before
billionaire hedge fund manager Carl Icahn
tweeted this week that he had bought a large position. After lagging the market for most of the year, Apple shares have gained 17% over the past month.
Apple remains a top player at the high end of the smartphone market,
especially in the United States, where most carriers subsidize more than
two-thirds of the cost of a new phone for customers who sign a two-year
contract.
The lower-priced phone would help Apple better compete for customers
who pay month to month and those who live in less-wealthy countries
where carriers don’t offer subsidies. Apple currently offers older
models, such as the 2010 iPhone 4, to those customers. But the older
phone still costs $450 without a subsidy and may lack the appeal of more
recent models running Google’s Android software.
“They’ve been wickedly profitable but their market share is kind of
plateauing,” says Ramon Llamas, mobile research manager at IDC. Apple
captured 18% of the smartphone market in 2011 and 2012, according to
IDC. “A little more attention to emerging markets is warranted.”
Competitors with $200 to $300 phones have been growing faster than
Apple in many less-wealthy markets, according to data from Gartner.
Apple sold 31.9 million phones worldwide in the second quarter, up just
10% from a year earlier, Gartner reported, second to Samsung. But
Apple’s next three competitors – LG Electronics (
066570.KS), Lenovo Group (
0992.HK) and ZTE (
0763.HK) – sold almost as many, 31.8 million combined, as their sales jumped 93%.
Still, Llamas isn’t sure a new lower-priced phone is needed. Lower
pricing and greater promotions of older models could work just as well,
he argues.
Could the cheap phone move backfire?
And Apple’s rumored move to offer lower-priced new iPhones could
backfire. Some analysts fear that a portion of wealthy customers will
forgo buying more-expensive models in favor of the “5C.” That could cut
into Apple’s revenue and profits. The move could also tarnish Apple’s
reputation as a leading premium phone maker, particularly if the
lower-priced model is seen as chintzy or with key functions crippled.
But if Apple announces a lower-priced model, it is more likely to
create a desirable, full-featured product in keeping with the company’s
premium image, according to John Gruber, who has followed Apple for over
a decade at his website,
DaringFireball.net.
“The 5C is not about selling a piece of junk to some sort of unwashed masses,”
Gruber wrote on Tuesday.
“It’s about continuing to push the price down to expand the iPhone’s
market without changing what the iPhone brand stands for.”
At the high end
Following a pattern Apple has established over several years, the new
high-end iPhone is likely to retain the outward appearance of the
current iPhone 5. Apple tends to produce a major iPhone overhaul only
every other year, in keeping with the two-year contract cycle of many
mobile phone subscribers. And pictures floating on the Internet show a
rumored new iPhone with a similar shape and upgraded internal components
to the current model.
But many analysts expect Apple may incorporate a brand-new feature
this year – a fingerprint reader hidden in the iPhone’s tiny home
button. Apple bought mobile security firm AuthenTec and its
fingerprint-scanning technology last year for $356 million. And text
contained in beta versions of Apple’s new iOS 7 software
appears to reference a finger print sensor, too.
“It’s a great way to ease the hassle of remembering passwords,” says
Ken Hyers, senior analyst at Strategy Analytics. “It will be much more
reliable than the facial-recognition technology that Samsung first
introduced with the Galaxy S3, and easier to use, too.”
Combined with several wireless technologies already in the iPhone,
the fingerprint scanner could also be part of a new mobile-payments
network from Apple. That would be quite different from Google’s Google
Wallet payment system, which relies on phones that have specialized
hardware, known as a Near Field Communications, or NFC, chip. U.S.
mobile carriers have blocked Google Wallet apps and are planning to roll
out their own NFC-based payment network known as Isis. But neither has
caught on yet.
Apple’s system, relying on Bluetooth and Wifi standards, could ignore
the NFC wars and build off its existing iOS app called Passbook, which
currently works for items like travel and entertainment tickets. Apple
mobile development chief Craig Federighi made fun of Android's NFC-based
file transfer system at the company's developer conference in June.
"There's no need to wander around the room bumping your phone," he said,
referencing the system featured prominently in Samsung television ads.
Apple fans hoping for a bigger screen are likely to be disappointed.
Android phones have featured ever larger screens – the new LG G2 model
unveiled August 7 has a 5.2” screen, one of the biggest yet. Google's
Moto X phone has a 4.7" screen.
But Apple is trying to avoid further fragmenting its lineup in order
to make it easier for developers to write apps that will look good and
run smoothly on all iOS hardware. Analysts expect Apple will stick with
the 4” screen introduced on last year's iPhone 5. The screen was
slightly longer than earlier models but maintained the same width, so
apps that weren’t updated for the new size could just display a black
bar over the extra space.
Some analysts say Apple needs to move to bigger screens to better
compete against Android. That probably won't happen until the company's
2014 upgrade cycle.
“It’s just like in the movie 'Jaws' – what we need is a bigger boat,”
says Roger Entner, founder of Recon Analytics. “If you’re going to
charge a premium and seek to delight your customers, you have to be
leading, not following, the trend.”