Editorial: Likely Scenarios For 2011’s iPhone Hardware Refresh | iLounge Article

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Editorial: Likely Scenarios For 2011’s iPhone Hardware Refresh

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By Jeremy Horwitz

Editor-in-Chief, iLounge
Published: Tuesday, August 30, 2011
Articles Categories: Editorials

Up until this year, Apple always released new iPhones in June or July, and certain details—enclosure and spec changes—tended to leak out ahead of time, providing an early idea of what to expect. This year was different. Apple is waiting a few extra months to debut new iPhone hardware, and there have been so many different leaks that no one’s sure quite what to make of them.

Since we’ve received many inquiries from readers as to what’s likely to happen, we wanted to share some educated speculation with you—essentially the scenarios that our editors have been discussing in anticipation of official announcements from Apple. Most of our attention focuses on new iPhone hardware; the other part is on what changes, if any, can be expected from data plans as iPhones begin to transition into the 4G/LTE era.

New iPhones

Though consumers only remember the products Apple actually releases, it’s well-established that the company has Plan A, Plan B, and possibly even Plan C scenarios mapped out for a given year. Multiple options enable production lines to keep rolling when, for example, the third-generation iPod touch’s rear camera has last-minute problems and needs to be left out.

Based on official and unofficial leaks, it appears that Apple has been working on at least three different iPhones for possible 2011 release. The first is a tweaked “iPhone 4S” that will largely resemble the iPhone 4—metal band in the center—and could either become a cheap or a same-priced sequel to the current iPhone 4, depending on how manufacturing proceeds with the iPhone 5. Second is the true iPhone 5, a redesigned thinner model that could be either a same-priced or more expensive follow-up to the iPhone 4, depending on manufacturing yields and marketing plans. Third is a smaller iPhone—let’s call it iPhone Mini*—which is designed to be a basic entry-level model, and possibly dependent on iTunes in the Cloud. We see three scenarios as being possible at this point.

(a) iPhone 3GS/Mini + iPhone 4S. Though the iPhone 3GS is arguably long in the tooth, Apple has repeatedly hinted that it’s interested in offering an affordable phone in developing markets—notably China. Under the most “conservative” scenario, Apple could keep the iPhone 3GS around as a super-cheap model and continue to offer it to GSM customers. Unfortunately, most of the Chinese market uses a separate cellular standard called TD-SCDMA that is not supported by any current iPhone. An iPhone with at least a little new engineering and a low price tag would be required to reach the Chinese masses. This budget model could be the iPhone Mini, adding worldphone support, including the TD-SCDMA support Apple needs to expand further in China. It would not aim for speed or performance improvements—it would be deliberately weaker than other iPhones. Note that there have been no known component or test result leaks for such a device. (* Our editors continue to debate whether Apple would call it the iPhone Air, iPhone Cloud or something else.)

In this scenario, Apple would upgrade the iPhone 4 with an A5 chip, better 8MP camera, more storage space, and possibly a slightly larger screen, and call it the iPhone 4S or something similar. We think of this as the “engineering problems” scenario, in which the more advanced iPhone 5 has proved too difficult to manufacture, and Apple makes a pragmatic decision to expand the iPhone footprint as best as it can.

(b) iPhone 4S + iPhone 5. Under this scenario, a different pair of iPhones debut at the same time. One is the iPhone 4S, which has been customized here as a budget-conscious replacement for the iPhone 3GS, offering similarly low storage space and very modest performance tweaks, quite possibly with worldphone support so that Apple can sell a single model in most parts of the world. Even TD-SCDMA support could have been added via quiet testing of an inconspicuously iPhone 4-like device in China. The other device is the iPhone 5, a thinner but taller and wider model with a larger screen (3.7”), worldphone support, an upgraded camera, and possibly 4G/LTE functionality. This iPhone has been completely redesigned from the iPhone 4, including a gesture-sensitive Home Button that can be used for app switching.

We think that this is the most likely scenario. Part leaks and comments from Apple appear to suggest the continued sale of an iPhone 4 in modified form this year, along with a streamlined but more powerful iPhone 5. The only big question mark is whether the iPhone 5 gets 4G/LTE support, and there are active debates right now as to whether a thinner iPhone would have enough space for all the hardware necessary to provide a good 4G experience. LTE remains sketchy enough across the world that Apple could pass on this feature until next year’s model, marketing concerns aside. This seems very possible, with LTE support coming first to the iPad family.

(c) iPhone 3GS/Mini + iPhone 4S + iPhone 5. Under this possible but challenging scenario, Apple uses 2011 to transform the iPhone into a true family of products. An entry-level, super-inexpensive model is offered for budget-conscious users, and is either the iPhone 3GS or the supposedly smaller, cloud-dependent iPhone Mini. Here, the iPhone 4S is offered as a speedier mid-range model, replacing the current iPhone 4. iPhone 5 debuts as the high-end model for users who are willing to pay more for a superior camera, bigger screen, and possibly more storage space.

Which of these scenarios will Apple go with? It’s still unclear. But if we were betting based on the official and unofficial leaks to date, we’d guess (b); (c) would be an aspirational goal. That said, it is interesting—surprising, even—that there have been no reports of slowed current-model iPhone production, no slippage in iPhone 3GS or iPhone 4 availability from Apple or third-party retailers, or other signs that past models are on the cusp of being phased out. Such signs normally precede a new iPhone launch, and may suggest that Apple will stagger new hardware rollouts globally to more gently ramp down production this year.

New Data Plans?

When Apple transitioned from the original iPhone to the iPhone 3G, there was a period of hand-wringing over increased monthly data charges—unlimited EDGE data plans went for $20, and unlimited 3G plans started at $30. If you’re wondering whether something similar is likely to happen with 4G/LTE phones, the answer appears to be “no,” at least in the United States and Canada. For the time being, AT&T, Verizon, and other companies seem to be okay with charging the same prices for 4G/LTE service as they did for bandwidth-capped 3G.

The big question is whether these companies will use the launch of new iPhones as an excuse to push existing “unlimited 3G” customers out of their grandfathered-in plans, and into limited 3G or 4G/LTE plans. AT&T has so far been using carrots rather than sticks to push customers to voluntarily make the transition, only allowing existing iPhone 4 users to add tethering/hotspot features if they move from unlimited plans down to limited ones. New users are required to choose limited plans. But now AT&T may try to force existing customers to give up their unlimited service for new hardware. We’re hoping that this doesn’t happen.

In any case, new iPhone hardware can be expected this fall—most likely at the end of September or beginning of October. What do you think will happen with the iPhone lineup this year? How should Apple evolve the family? We look forward to your comments below.

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Comments

1

My take on this whole speculation is that so-called iPhone 4S is actually a successor to iPod touch. Basically, it will be the last year’s iPod touch with GSM (and TD-CDMA for China) iPhone 3GS-style antenna and chipset.

Posted by Nutmac on August 31, 2011 at 10:25 AM (PDT)

2

Furthermore, I am betting that so-called leak design for iPhone 5 is in fact leaked design for iPhone 4S (successor of iPod touch) whereas iPhone 5 will look largely the same as iPhone 4 (with some minor changes to antenna design to unify CDMA and GSM and change of back face material).

Posted by Nutmac on August 31, 2011 at 10:36 AM (PDT)

3

It is interesting.

I’ve touted for awhile that what you will see this fall is the iPhone 4S—an improved and faster iPhone 4 like you described.  No LTE, possibly HSPA+.  No NFC.  The iPhone 5 is next year with all those yummy goodies.

Back in June, I was convinced.  Now?  I’m not so sure.

First, Android is running roughshod over the iPhone hardware-wise.  An iPhone 4S will be barely competitive with what’s out there now.  Sure, Apple can say that it’s the software that matters (and they’d be right) but hardware-specs matter to a certain noisy selection of people.

Second, with Steve’s exit from the CEO Suite, Apple may want something cool to Wow The Pundits and do a full-court media press sans Steve to show that they’re still the same Apple.

Third, as you mention, is the bottom part of the market—China in particular.  The 3GS is a bit long in the tooth, but can Apple get away with the $199 iPhone 4S and the $49 iPhone 3GS.  Yes, the 3GS will run iOS 5 but people had a lot of complaints with the iPhone 3G running iOS 4 and I could easily believe those complaints will come back with iOS 5 on the 3GS.  And a $199 iPhone 4S and $49 iPhone 4 may be a tough sell—the 4S will be faster, but I don’t know that it will be that much faster to convince people to go up.

So, while I still believe it will be the iPhone 4S and the iPhone 4, I’m not as certain as I once was.  To quote the magic eight-ball, “Reply Hazy.”

Posted by Peter on August 31, 2011 at 11:28 AM (PDT)

4

I know beauty is subjective but I think the iPhone 4 is easily one of the most attractive electronic gadgets ever built. If they can make the glass panels tougher and fix the antenna issues, they’d be fools not to carry over the same basic design.

Posted by Paul on August 31, 2011 at 11:59 AM (PDT)

5

Peter, enjoyed your remarks—you are right on key points (Android, Steve, et.c).  I chuckled over the Magic 8-ball crack!

Posted by astroman33 on August 31, 2011 at 2:45 PM (PDT)

6

As an avid iPad user, I find more and more of the daily things I used to turn to the iPhone for, I now usemthe iPad for.  I could quite easily envision having an iPad for “power” use, and an iPhone mini with a cut own UI for out-and-about usage.

Posted by Dopial on August 31, 2011 at 5:59 PM (PDT)

7

At the end of the day, Apple has two main objectives: 1) maintain and increase market share for iOS; and 2) maintain the profit margin on each iPhone it sells.

A high-end iPhone to replace the iPhone 4 is a given. Whether it’s 4G capable is a matter of debate, but I doubt it, given that AT&T doesn’t have much 4G coverage in the U.S. right now and Verizon is still building out its LTE network. At the very least, a new iPhone will have a faster processor and likely a better camera. As an aside, I’d love to see them bump up the capacity to 64GB.

With a so-called iPhone 5 occupying the price points of $199 for 32GB and $299 for 64GB, there’s a need for Apple to maintain a phone at the $99 price point.

I think things get interesting here. What is the 4S? Some seem to think that it will be a souped-up version of the current 4 and sold at the $99 price point. Keeping in mind that Apple won’t sacrifice profit margin for market share, it makes sense for Apple to use the 4 as its $99 phone, since production and supply are already in place and over a year into things, they’ve achieved a nice economy of scale.

And what about the 4S? Is it a replacement for the 4? If so, what could the difference be, if we assume that the 4S is the new $99 phone? Frankly, I don’t think there could be a huge difference. My thought is that it’s pretty much the same as the 4, but uses the universal CDMA/GSM chip.

Could Apple do a really low-end iPhone mini? Sure. To do so, Apple would need to figure out a way to shave down cost. Perhaps Apple combines the attributes of the 3GS and 4 to create this uber-cheap phone. It wouldn’t have a retina display, but could have the A4 processor. Storage would be 8GB. All of this could be done with the existing supply chain and Apple could put something out for consumers that would be relatively inexpensive but also maintains Apple’s reputation for quality.

Posted by cxc273 on September 1, 2011 at 7:20 AM (PDT)

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