For the past few months, it's been rumored that Apple Inc. (NASDAQ:AAPL) will release another iPhone in 2013 besides its true iPhone 5 successor, which is said to aim specifically at emerging and lower-income markets like China and India. But to build the "low-cost" iPhone 6 -- at least one cheaper than the iPhone 5S expected to release within the coming months -- Apple may be resorting to cheaper-made processors for the very first time.
Citing an unnamed source, the China Times said Apple's low-cost iPhone 6 "uses a Qualcomm Snapdragon single-chip" with native support for Wi-Fi and Bluetooth, but no 4G LTE -- which would be another cost-saving measure for Apple. In fact, since Qualcomm makes separate versions of its Snapdragon chips for 3G and LTE, Apple could have the option to release separate builds of the phone with different connectivity capabilities.
The China Times wasn't the first to say Apple would release an iPhone powered by Qualcomm's Snapdragon chips: On Jan. 24, analysts at Detwiler Fenton released a research note (via Forbes) that said the low-cost iPhone 6 would include a Qualcomm Snapdragon processor, among other features.
"It is likely that the work with QCOM is being driven by AAPL's concern regarding maintaining gross margins as well as the need to differentiate the product by performance," Detwiler Fenton said in its research note. "AAPL would not want a value priced iPhone to offer the same kind of graphics and video support, processing power etc. that its premium priced device would, therefore a less powerful and lower-end Snapdragon integrated solution would help segment the product."
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In addition to Snapdragon chips, the cheap iPhone 6 may also introduce new features like wireless conductive charging from Qi, which DigiTimes reports will be implemented into the next-generation "flagship" smartphones from both Apple and Samsung in 2013 and beyond.
"Apple is likely to adopt the wireless charging technology developed internally, but it remains unknown if the next-generation iPhone will come with built-in wireless charging capability or with other attached accessories," unnamed sources told DigiTimes on Friday.
However, considering DigiTimes' mixed track record when it comes to Apple rumors, as well as the fact that Apple's own Phil Schiller downplayed rumors of such a feature hitting the iPhone back in September (since the wireless charging unit still needs to be plugged into a wall), the possibility of seeing wireless charging features in the iPhone 6 is remote at best.
"Having to create another device you have to plug into the wall is actually, for most situations, more complicated,” Schiller told AllThingsD.
But while future technologies likely wouldn't be featured in a low-cost iPhone, it's certainly possible we could see cheaper chipsets like those from Qualcomm being key features in making the iPhone 6 the most accessible smartphone Apple has ever built.
iPhone 6 Rumors: Will Apple Actually Release The Phone With Snapdragon Chips?
While it's certainly possible -- and logical -- for Apple to release a low-cost iPhone with low-cost parts and chips, two reports doesn't necessarily mean it's true.
News media -- even in China -- are incentivized to keep the iPhone rumor mill churning: By releasing a report about a cheap iPhone 5 featuring Qualcomm's Snapdragon chips, the company knows hundreds -- possibly thousands -- of news sites and tech blogs will cite them. Furthermore, the initial research note from Detwiler Fenton mentioning Qualcomm's Snapdragon chips has little support to it: While the notion is certainly practical, we have no idea where this information comes from. It may have come from a trusted source within Apple's supply chains in Asia, or it may have come from thin air. Detwiler Fenton has little obligation to reveal its "sources," but every incentive to publish what they "hear."
In all likelihood, Apple would use some of its older (but still functional) chipsets to build a cheap iPhone 6 -- maybe the dual-core A4 chip initially released with the iPhone 4, or even the dual-core A5 chip from the iPhone 4S. However, if Apple wants a solution that can pack Wi-Fi, Bluetooth and cellular into one processor, it would make sense to work with Qualcomm -- which already has close ties to TSMC, Apple's key chip foundry -- or even Broadcom, which recently introduced its all-in-one 5G Wi-Fi Combo chipset, to help build the iPhone 6.
iPhone 6 Rumors: What Features Might It Include?
iLounge editor-in-chief Jeremy Horwitz detailed in January what he called the "budget iPhone 5," which he says looks like the iPhone 5, but features several new design tweaks.
“Yes, it will be made substantially from plastic,” Horwitz wrote, echoing an earlier DigiTimes report that said the iPhone 5S or 6 would feature a hybrid chassis made of both plastic and metal. “No, it won’t just be a Retina- and Lightning-equipped refresh of the iPhone 3G or 3GS, Apple’s last plastic iPhones, nor will it look just like an all-plastic version of the iPhone 5. This new model is actually a cross between the iPhone 5, the fifth-generation iPod touch, and -- wait for it -- the iPod classic. Yes, really. It will have a 4-inch screen, like the iPhone 5, a bottom like the latest iPod touch and a shape that’s most similar to the iPod classic.”
The original DigiTimes report mentioning the low-cost iPhone 6 said the new iPhone’s internal parts could “be seen from the outside through a special design." If this rumor is accurate, the finished design for the cheap iPhone 6 might look like an iPhone 5 mixed with the plastic enclosure of the iPhone 3GS from 2009 mixed with the final design for the Bondi blue iMac in 1998, which was characterized by its brightly colored, translucent plastic casing that could let users see the innards of their desktop computers for the first time.
Horwitz believes the low-cost iPhone 6 will feature specs nearly identical to those in the iPhone 5, but will be "a half-millimeter taller and a half-millimeter wider," as well as a full millimeter thicker. While these changes are minimal, Horwitz noted the biggest design change in the iPhone 6 will be the curves.
“Apple’s budget housing looks closest to the iPod classic in shape, though not in materials,” Horwitz said. “Unlike the plastic iPhone 3G/3GS, which featured soft curves on all sides, the budget iPhone’s curves start and end at flat surfaces, so each side and the back are flat. This seems like a trivial change, until you realize that it allows Apple to use flat rather than curve-matched parts: The right side has a flat, centered SIM card tray just like the iPhone 5’s, while all of the buttons and ports are on flat rather than curved surfaces. A flat-backed iPhone won’t rock on a flat surface when it vibrates, either.”
The proportions of the iPhone 6 will resemble those of the latest-generation iPod touch, with similar locations for the camera, microphone, and rear flash, according to Horwitz. The bottom microphone, headphone jack, Lightning dock, and speaker are in the same locations as in the iPhone 5, but the new iPhone 6 is said to have an extra microphone on the bottom, as well as four individual holes for the speaker grill, rather than the 26 speaker holes at the bottom of the iPhone 5.
“In summary, the budget iPhone will look a lot like an iPhone 5 from the front, an iPod classic from the side, and an iPod touch 5G on the bottom -- only made from plastic rather than glass or metal,” Horwitz concluded. “It won’t make any bold departures from past Apple designs, but then, it’s supposed to be an inexpensive iPhone and achieves that goal pretty much as expected.”
Besides the form factor, Horwitz believes the next iPhone will feature a processor bump -- possibly an Apple-built A7 chip -- as well as improvements to the camera and flash, integrating a new aperture and 13-megapixel lens.
That said, most rumors about the iPhone 6 have revolved around its display, as Apple is reportedly investing a great deal of time, energy, and capital on the screen for its next-gen iPhone 5S and iPhone 6.
A Jan. 3 report by the China Times said Apple might switch to a "Touch On Display" panel currently in development at one of the company's suppliers, Taiwan-based Innolux Corp. (TPE:3481), which has reportedly licensed Sharp's proprietary IGZO display technology.
Whether or not Apple taps Innolux to make screens for the next iPhone, however, the company will most likely feature Sharp's ultrathin IGZO display technology in its next iPhone -- the iPhone 5S, iPhone 6, or both.
In late December, Asymco analyst Horace Dediu and DigiTimes both mentioned Apple’s alleged investment in the ultrathin IGZO displays produced by Sharp, predicting the inclusion of the technology in Apple’s next batch of iOS devices, including iPhones and iPads. Dediu also pointed to Apple’s recent $2.3 billion investment in “product tooling, manufacturing process equipment, and infrastructure,” believing the cash was used to help bail out Sharp, which had been in financial straits last year. Sharp is reportedly going “all in” on IGZO technology, so it’s possible Apple saved Sharp to leverage its investment in the next generation of displays.
As noted by Tom's Hardware, the IGZO display is not only thin and tough, but also can handle even higher screen densities than Apple’s Retina display, which is visually stunning on its own. IGZO displays can reportedly handle display densities north of 330 ppi: In comparison, the new iPad 4 can only achieve 264 ppi.
One of the advantages of IGZO display technology is its lower power consumption. Most Apple products, from the iPhone 5 to the iPad 4, require cartoonishly big batteries to achieve just eight hours of power -- this is because current-gen Retina displays are extremely power-hungry. If Apple wanted its iPhone 6 not only to last longer during the day but also to charge faster when plugged in, IGZO seems to be the way to go for the next generation of iOS devices.
Giving credence to these rumors, Taiwan-based AU Optronics Corp. (NYSE:AUO) reportedly plans to develop a Retina display for the next-generation iPad mini, which may require IGZO technology to make such a Retina display feasible.
Why Apple Needs To Release The iPhone 6 In 2013
Apple is facing stiffening competition from its rivals at Samsung Electronics (KRX:005935), Google (NASDAQ:GOOG), and even Microsoft (NASDAQ:MSFT), so the Cupertino, Calif.-based company will need to pull out all the stops for its iPhone 5 successor, as well as for the low-cost iPhone 6, if it hopes to keep customer interest in an increasingly crowded marketplace.
With the advent of cheaper, smaller, and more power-efficient chipsets, Apple can certainly afford to build an entry-level to midrange smartphone on top of its current iPhone 5 (or 5S) -- either making it larger, like the Samsung Galaxy S3, or possibly a smaller iPhone Nano -- to appeal to consumers who can’t quite afford Apple’s most popular product, including many in China. Furthermore, if Apple’s iPhone 6 was not only cheap but also smaller than the current 4-inch iPhone 5, the iPhone 6 could resonate greatly with Asian consumers that find small devices both chic and easier to hold.
China is the biggest new market for Apple at this moment: The company is reportedly trying to strike a deal in 2013 with China Mobile Ltd. (NYSE:CHL), the largest telecommunications carrier in the world with 703 million active subscribers, to build a TD-LTE version of the iPhone 5 to work on the carrier’s high-speed networks. Apple CEO Tim Cook even visited China Mobile headquarters on Jan. 10 to meet with company Chairman Xi Guohua to discuss “matters of cooperation.”
Reports of Apple's desire to build multiple iPhone models have been echoed on Wall Street. On Jan. 2, Topeka Capital Markets analyst Brian White said the company will likely release its iPhone 5 successor in more colors and screen sizes, implying that Apple might sell an iPhone that's smaller or larger than the current iPhone 5 or even the previous-generation iPhone 4S or 4 units.
"Although Apple offers a 4-inch screen on the iPhone 5 and a 3.5-inch screen on the iPhone 4S and iPhone 4, the company has never offered multiple screen sizes for a single model," White said. "We believe this is about to change with the next iPhone offering different screen sizes that we believe will allow Apple to better bifurcate the market and expand its reach."
Considering Apple’s urgency to strike a deal with China Mobile, as well as the growing number of rumors pointing to a 2013 release date for an iPhone 6 that would be compatible with the popular carrier, it’s likely we could see Apple release both the iPhone 5S and iPhone 6 this year.
Apple sold 47.8 million iPhones and 22.9 million iPads in the company's fiscal first quarter ended Dec. 29.