Not so budget: iPhone 5C to cost $400-500, fit between iPhone 5S and 4S in Apple's lineup
As tends to be the case with the rumor mill, only about 25% of what we hear is accurate, and the other 75% is based on incorrect assumptions generated from trying to fit together all of the misinformation. The idea that Apple would be coming out with a truly budget device always seemed a bit too pie-in-the-sky for us, and if a new report is to be believed, the iPhone 5C won't be so budget after all, and may actually be a replacement for the iPhone 5.
The idea that Apple would release a $200 budget iPhone was one that started because one man (and notorious Apple fanalyst) Gene Munster simply repeated the rumor as many times as he could. The prediction was based on the worst possible idea that Apple needed to have a budget device, so Apple would create said budget device, despite there being little to no evidence that it was going to happen.
Once we heard about the iPhone 5C, people started connecting the dots with Munster's claims, and here we are. But now, a much more reliable source: KGI's Mingchi Kuo is giving a much more believable story. Kuo says that the iPhone 5C is designed to replace the iPhone 5 on store shelves and in the price lineup, saying:
iPhone 5C to replace iPhone 5, while iPhone 4S goes on. We’ve learned that the iPhone 5 line will be terminated from 4Q13, while the iPhone 4S line will carry on. From this, we infer that iPhone 5C is launched to replace iPhone 5. In other words, the 5C model will be positioned as midrange. We forecast its retail price to be US$400-500. We expect iPhone 5S, iPhone 5C, iPhone 4S and iPhone 4 will fall into the price ranges of US$600-700, US$400-500, US$300-400 and US$200-300, respectively, in the new product cycle. Since iPhone 4’s specs may not be adequate to run on iOS7, we think this line may be terminated.
Additionally, Kuo is saying that we may actually see the iPhone 5C earlier than we thought, because an TDD-LTE version of the device may be headed for China in time for the country's October Golden Holiday, assuming the deal with China's largest carrier, China Mobile, do reach a deal. The iPhone 5C would still launch in Q4 in the U.S. and the rest of the world.
This new scenario sounds much more plausible to us, because it allows Apple to continue to control its supply chain and costs, while not directly pandering to the low-end (something Apple hates to do), and it allows for a bit of differentiation in devices. With this plan, the three devices that Apple would sell: the iPhone 5S, 5C, and 4S, would all look different, instead of the top two looking exactly the same. And, no doubt Apple can build the 5C more cheaply than the iPhone 5, which helps boost profit margins.