Apple: To 4S or Not to 4S?
We're now just a day away from the moment of truth for Apple (NAS: AAPL) .
Its "Let's Talk iPhone" event should answer every question, clear up every rumor, and debunk any lingering myths about the tech giant's next generation of smartphones.
Things got a bit interesting over the weekend, when Apple watcher 9to5Mac unearthed references to an iPhone 4S in the latest beta version of iTunes.
This could mean many things, but the most tantalizing scenario finds Apple offering up both the highly anticipated iPhone 5 and a cheaper iPhone 4S tomorrow.
Some may argue that the historical $199 entry-level price for a new iPhone is already pretty cheap. If folks are building up Amazon.com's (NAS: AMZN) Kindle Fire at $199 as a mass-market tablet, why can't everyone own a $199 iPhone 5?
Well, as anyone that has actually owned an iPhone will tell you, the real cost of ownership comes in the form of the data plans. Monthly connectivity will set an iPhone owner back nearly $2,000 over the life of the two-year contract, making the original $199 price tag seem tiny in retrospect.
It's not a surprise that AT&T (NYS: T) and Verizon (NYS: VZ) are the only two major stateside carriers currently offering Apple's iconic smartphone. The average selling price of the iPhone to these carriers bumped up to $625 each earlier this year.
AT&T and Verizon can afford to sell the handsets at $199 and $299 -- willing to subsidize hundreds of dollars upfront -- because they know it will translate into thousands in revenue over the course of contractual ownership. Carriers also typically offer the previous iPhone model at a price point of $100 or less, but only because they are still sticking buyers with lucrative two-year deals.
The fact that 4S is floating around in the iTunes coding would seem to indicate that either there is no iPhone 5 or that Apple is rolling out an even cheaper version of the iPhone 4 that would make it easier for Sprint (NYS: S) , T-Mobile, and even cheaper carriers to join the fun.
It's in Apple's best interests, naturally. Google's (NAS: GOOG) Android continues to gain market share in this country, largely because several handset manufacturers are making the most of the "free" open-source platform that has become the flagship offering outside of AT&T and Verizon Wireless. An iPhone 4S with an average selling price of $300 to $400 can be realistically offered by cheaper carriers at $100 or so without having to juice up their monthly rates.
It will be a delicate balance for Apple if it goes that route. It needs to make the entry-level iPhone 4S feature-rich enough to buy, yet lacking enough on specs to keep high-end users thinking about the iPhone 5.
Either way, the speculation ends tomorrow in Cupertino.
At the time this article was published The Motley Fool owns shares of Google and Apple.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com, Google, Apple, and AT&T, as well as creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.