By Phil Goldstein
(Editor's Note: Click here for our complete coverage of Apple's iPhone announcement.)
It's finally official: Apple (NASDAQ:AAPL) confirmed it will host an event on Sept. 10 at its headquarters in Cupertino, Calif., where it is widely expected to announce a new iPhone. Sept. 10 is almost one year to the day after Apple unveiled the iPhone 5, which has since sold tens of millions of units. However, if the rumors prove correct, this year's iPhone announcement will represent a major shift in Apple's strategy.
Apple is expected to announce two new iPhone models this year: a high-end successor to the iPhone 5, which will likely be called the Phone 5S (in keeping with Apple's habit of naming updated models with an "S"), as well as the mid-range iPhone 5C, a cheaper variant expected to come in multiple colors.
The days of near-absolute secrecy about iPhone launches seem to have evaporated, and the rumor mill has been at full tilt for weeks over what Apple might announce at its event. To keep track of everything, FierceWireless has compiled the six most prominent iPhone rumors, starting with the most plausible:
A cheaper iPhone (iPhone 5C)
Apple is widely expected to unveil a cheaper iPhone model alongside its new flagship iPhone. Apple has been pushing assembly partner Hon Hai Precision Co., better known as Foxconn, to start shipping both a new, high-end iPhone and a new, low-end iPhone, according to an August Wall Street Journal report. The report, citing unnamed sources, appeared to confirm analysts' suspicions that Apple will introduce a lower-cost iPhone model with a plastic casing and cheaper components in addition to a new flagship model.
Numerous blogs have posted pictures of the alleged cheaper iPhone 5C (with the "C" presumably standing for "color"). Pictured here alongside the rumored iPhone 5S, the 5C model appears to have the same shape and hardware design as the S, just with different casing materials. Presumably there will be a host of colored casing options for the 5C--Apple's Sept. 10 event invitation features multiple colored circles and the statement that "this should brighten everyone's day."
The iPhone 5C is likely to feature mid-range specifications in terms of processors, camera technology and other internals in order to keep the price down. It's unclear whether the 5C will carry support for LTE networks, as the iPhone 5 does, though various leaked specs seem to indicate it will be similar to the iPhone 5, which means LTE would be on board.
It's also unclear at this point how much a cheaper iPhone would cost or how much additional market share it would generate for Apple. Currently, the 16 GB iPhone 5 sells for $649 unlocked, but carriers subsidize that cost down to $199.99 with a two-year contract.
In May, J.P. Morgan analysts Gokul Hariharan and Mark Moskowitz theorized, according to AllThingsD, that a cheaper iPhone priced at around $350 on an unsubsidized basis could help Apple take away some mid-range smartphone share from rival Samsung Electronics. "Currently Samsung dominates this segment ($200-500 price range) with 35+ percent market share. … We believe Apple could take 20-25 percent of this market in the next 12 months (from almost no market share currently), if it prices a lower-priced product at $350-400 levels," they wrote.
A Gold iPhone
The iPhone has been somewhat like the Ford Model T: It only comes in white and black (and before 2011, only black). That is about to change, according to various reports. The iPhone 5S will reportedly come in a gold metallic color, according to pictures posted online by several blogs. According to the Japanese site ASCII, the phone's new shell was produced by parts supplier Moumontai.
The new color option was described to AllThingsD as an "elegant" gold hue. "Think champagne, not ingot," one unnamed source said. There you have it: champagne.
An A7 processor for the iPhone
Fox News anchor Clayton Morris claimed on Twitter in late August that the iPhone 5S will sport an Apple-designed A7 processor that is "running at about 31% faster" than the iPhone 5's A6 chipset. Morris also claimed his sources have pointed to a separate Apple chip for motion tracking. The iPhone 5's A6 chip is dual-core, and it seems like the iPhone 5S will also remain dual-core, according to 9to5Mac, which also reported that the A7 may be a 64-bit processor. Such a chipset the would help in "making animations, transparencies, and other iOS 7 graphical effects appear much more smoothly than on existing iOS Devices," the site reported.
Apple typically designs its own chips and has others make them. Samsung Electronics has, in the past, been Apple's main application processor supplier. KGI Securities analyst Ming-Chi Kuo wrote in a recent note that it seems like a transition to 64-bit processors will likely occur in the near future. 64-bit processors, which are standard on PCs and laptops now, also support more RAM, which could boost device performance.
A Fingerprint scanner
Sometimes Apple's new hardware features are revealed via its software. Code contained in the fourth beta release of Apple's iOS 7 system upgrade suggests the company will introduce biometric fingerprint scanning in the iPhone 5S. KGI Securities analyst Ming-Chi Kuo has speculated that the technology will not come to the iPhone 5C.
Based on screenshots supplied to 9to5Mac by developer Hamza Sood, iOS 7 beta 4 includes a new folder named BiometricKitUI that appears to let users access a VoiceOver-enabled iPhone by swiping a sensor embedded into the smartphone's home button. The relevant code text states "Photo of a person holding an iPhone with their left hand while touching the Home button with their thumb_; A fingerprint that changes colour during the setup process._iPhoto of a person holding an iPhone with their right hand while touching the Home button with their thumb_Recognition."
Apple acquired digital security firm AuthenTec for $356 million in mid-2012. AuthenTec offered encryption technology, fingerprint sensors, identity management software and Near Field Communications services integrated into a range of portable electronics products, fueling speculation Apple would incorporate biometric technology into future hardware releases. Boosting the iPhone's security would help Apple push the device further into the enterprise sector and enable banks and financial services providers to accelerate their mobile rollouts.
As The Verge notes, fingerprint scanners aren't entirely unheard of in smartphones: Google's (NASDAQ:GOOG) Motorola Mobility installed fingerprint scanning technology in its Atrix HD smartphone in 2011. Initially, the technology may only be used to unlock the phone, but it could be used for secure mobile payments and other uses down the line.
So far Apple has not supported TD-LTE network technology, a variant of LTE that is popular in China and Japan and is also coming to the U.S. market via Sprint (NYSE:S), following its acquisition of Clearwire. KGI Securities analyst Ming-Chi Kuo said in August that both the iPhone 5S and iPhone 5C will support TD-LTE. Further, Reuters reported that a new Qualcomm (NASDAQ:QCOM) chipset designed for the next iPhone will support TD-LTE.
Apple will need to support TD-LTE in the iPhone if it is to secure distribution through China Mobile, which is the world's largest carrier with 740 million total subscribers. China Mobile is using TD-LTE network technology for its next-generation network rollout. Apple has inked deals with No. 2 player China Unicom and No. 3 China Telecom, but not yet China Mobile.
Indeed, Apple CEO Tim Cook met with China Mobile Chairman Xi Guohua in Beijing in July, his second visit this year. "The discussions with Apple are still ongoing," Xi said in August. "Most of the discussion revolves around commercial details and technology issues." Kuo believes that 25 percent of Apple's iPhone 5S shipments would support TD-LTE and 35 percent of its iPhone 5C shipments would support the technology.
In the United States, Sprint would definitely benefit from the addition of TD-LTE in the iPhone. Sprint plans to use Clearwire's 2.5 GHz spectrum for a nationwide TD-LTE rollout to complement its existing FDD-LTE service on 1900 MHz and its planned LTE service on 800 MHz airwaves. Steve Elfman, president of network operations at Sprint, said that beginning in 2014, all of the carrier's devices will be capable of operating on 2.5 GHz spectrum, which will provide added capacity and speed boosts for Sprint devices. As for the iPhone? "We can't confirm anything on the iPhone at this time or anytime," Elfman said on Sprint's second-quarter earnings conference call in late July, according to a Seeking Alpha transcript. "So take my comments to all the other devices this point in time and we'll wait to see what Apple does in the future."
Support from more carriers in the United States
It's unclear exactly which U.S. carriers will sell the iPhone 5S and the iPhone 5C. Although it's virtually guaranteed that the main Tier 1 U.S. carriers will offer the new, high-end iPhone, it's unclear whether they will offer the less expensive iPhone 5C. Further, it's unclear whether the prepaid brands from the Tier 1 carriers--such as T-Mobile US' (NYSE:TMUS) MetroPCS brand and Sprint's Boost Mobile, will sell the iPhone 5C (or the iPhone 5S).
The only iPhone rumors tied to the major carriers are vacation blackout dates (T-Mobile reportedly is preventing vacations Sept. 20-22). These blackout dates in the past have hinted at when exactly a new iPhone will go on sale.
U.S. Cellular (NYSE:USM) said in May it will launch Apple products, including the iPhone, later this year, reversing its earlier opposition to the phone. U.S. Cellular probably will sell a new version of the iPhone rather than last year's iPhone 5, but again it's unclear if the carrier will offer just the iPhone 5S or both the iPhone 5S and the iPhone 5C.
Leap Wireless (NASDAQ:LEAP) CFO Perley McBride said in August Leap is not required to purchase additional iPhones from Apple to meet its first-year commitment to the company. On Leap's second-quarter earnings conference call, McBride said that because of Leap's efforts to increase its sales of the iPhone, the company does not have to purchase more iPhones. Leap has a three-year, $900 million deal with Apple for iPhones.
If Apple does release an inexpensive iPhone, that device could well be offered by a range of prepaid carriers. Prepaid carriers typically do not subsidize the cost of smartphones, and that position makes it difficult for them to convince users to spend up to $600 on a new phone. But a $350 iPhone 5C could help the likes of Leap, Boost Mobile and others attract new customers.
Further, MVNOs like Ting, Solavei and others could entice new customers with a low-cost iPhone. MVNOs to date have largely been unable to sell Apple products.