iPhone 5C Predicted to Replace iPhone 5, iPhone 4S Sales to Continue

A new iPhone market forecast by KGI Securities predicts "substantial shipments growth" starting in August and supports the flood of rumors about a new, lower-cost "iPhone 5C", which is widely speculated to be released sometime in September. The report by Ming-Chi Kuo, who has a solid track record when it comes to Apple rumors, highlights five key trends for the upcoming few months:

- The components and the EMS (electronics manufacturing services) for the new iPhone will be ramping up in late-August/early September.
- Hon Hai (also known as Foxconn) will start manufacturing a version of the iPhone 5C supporting the TDD-LTE used by China Mobile in August, earlier than expected.
- Models supporting the TDD-LTE standard are predicted see a penetration of 25% in iPhone 5S and 35% in iPhone 5C shipments, which may boost Apple's presence in China.
- The iPhone 5 will be discontinued at the end of the third quarter, but shipments of the iPhone 4S will continue until the end of 2013. The iPhone 5C is therefore designed to replace the iPhone 5, rather than the iPhone 4S as originally predicted.
- The iPhone 5S will be the more popular model and will exceed the iPhone 5C in terms of shipments.

iPhone 5C rear shell compared to older iPhone models and iPod touch (Source: DetroitBORG)
A move by Apple to discontinue the iPhone 5 was rumored late last month, but it would be something of a surprise for Apple to continue offering the iPhone 4S while discontinuing the iPhone 5. Many had suggested that Apple's work to launch an iPhone 5C was an effort to unify Apple's lineup around the new Lightning connector and 4-inch display, but a move by Apple to keep the iPhone 4S on the market indicates that iPhone 5C is not a true "low-cost" device and is indeed primarily a repackaged iPhone 5.

Kuo suggests that during 2013, Apple will ship roughly 33.3 million iPhone 5S and around 27.2 million 5C units, with 5.2 million and 8.4 million units planned for the third quarter of 2013 respectively. The analyst also predicts that the iPhone 5S will retail at roughly $600–$700, whereas the iPhone 5C will sell for around $400–$500 SIM-free. The iPhone 4S will drop to roughly $300–$400 and the iPhone 4, which would fall to $200–$300, does not fully support the graphical requirements of iOS 7 and thus is likely to be discontinued, although it may continue to hang on for a brief time after the launch of the new iPhones.

Kuo also points to the fact that shipments of the new iPhone 5S will outsell those of the 5C, owing to the new gold color casing and a new maximum storage capacity of 128 GB. The report also says that production concerns over the iPhone 5S fingerprint sensor have eased, with Apple having "a defined timetable demanding yield rate improvement for fingerprint sensor module and casing".

Both of the new iPhone models are expected to be launched on September 10, with the exact time and venue still to be confirmed.