Tech giant Apple is set to begin the production of the next iPhone, speculated as iPhone 6 or iPhone 5S, in March for the preparation of its June or July release date, says an analyst.
Jefferies analyst Peter Misek told investors in a note this week that Apple is currently testing two new iPhone prototypes. One of the prototypes is the next generation of iPhone, while the other is the rumoured cheaper iPhone.
Misek has predicted that the next iPhone will be 0.8 inches bigger than the iPhone 5′s at 4.8 inches diagonally. Other rumoured features of the next iPhone are super HD camera, massive internal storage of 128GB, Near Field Communication, a better battery and IGZO screen display.
As for the cheaper iPhone, Misek said: "Similar to the iPad mini, we expect a concentrated low-cost iPhone rather than a 'cheap' one. Likely specs: polycarbonate case with 4in non-Retina display and no LTE."
We may see two iPhone launches this year; one in second quarter of 2013 and another in third or fourth quarter of the year. This is backed by the reports that Apple is looking to switch to a 6-month cycle instead of a 1-year cycle with the iPhone to be more aggressive against competitors such as Samsung and Google.
Misek explains that he expects that the rumoured cheaper iPhone will incur not much impact on Apple's earnings per share, because, while it would increase the company's market share, it would also decrease its gross margins.
In his note to investors, Misek said that he expects demand for the iPhone 5 to decrease as word of the 'iPhone 5S' begins to spread. He thinks that Apple will sell 44 million iPhones in the March quarter, which he says is "still well above" recent concerns that suggest Apple's shipments may fall way below 40 million.
Last week, the Wall Street Journal reported that Apple had halved its orders for the iPhone 5. The report led Apple's share price to dip below $500 per share.
The analyst believed that the decrease in orders is unlikely to be linked to weak demand for the iPhone 5, but instead due to an assembly bottleneck that caused component inventories to rise in the December quarter, as well as the upcoming start of production of the next iPhone. He also said that he believes demand may be in line or "slightly below optimistic expectations."
Apple remained tight-lipped on the details of its upcoming devices as well as on its plans for the year.