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Wednesday, September 21, 2011, 12:56 pm PT (03:56 pm ET)

Wedge analyst says Apple will release single iPhone 5 this year

In a note to clients, Wedge Partners analyst Brian Blair states that Apple will only release an updated iPhone 5 model and new 3G-enable iPod touch, and will not produce a significantly new iPhone 5 alongside an iPhone 4S model, as many are anticipating.

In a note obtained by AppleInsider, the analyst wrote, "We expect the focus of the new iPhone will be iOS 5, a speedier A5 processor and a higher resolution 8 MP camera with a small possibility of a larger 4 inch screen. We believe the casing will be largely similar to the iPhone with some particular modifications to the antennae."

Blair's description of a moderately new iPhone 5 fits in with details reported by analyst Ming-Chi Kuo, who told AppleInsider last week that he expected a revised iPhone 5 model that looked largely the same as the current iPhone 4 design.

In a separate listing of expectations, Blair said the new iPhone 5 would offer a dual-mode CDMA/GSM baseband chip build by Qualcomm, and that "Apple could have a software-based solution for switching carrier networks that mimics the functionality of a handset with multiple SIM card slots. This would give users in emerging markets who frequently switch between carriers (using handsets with 2 or 3 sim card slots) the freedom to move between carriers easily."

A new model may sport a larger 4 inch screen, but called a rumored rectangular Home button with support for swiping touch gestures "unlikely."

However, Blair added, "We don’t expect a second, dramatically different iPhone to accompany this as we don’t think Apple needs to have 3 models in the market to address the high end, mid-tier and low end since the iPhone 4 (with memory lowered to 8 GB) will drop to $99 and effectively attack those markets."

Shoring up his analysis, Blair explains that, were Apple to introduce a new iPhone 5, it would make little sense to also bump up the processor of the iPhone 4S, "if the goal is to sell it into the pre-paid market at a lower cost."

iPhone 4


Instead, Blair noted that "the [existing] iPhone 4 price should drop to $99 and while Apple will initially clear inventory at slightly reduced prices, the company will continue to sell an 8GB version into the global market for $99 this year, followed by a drop to $49 in the 2012. We expect this iPhone 4 to continue to be a strong seller and believe it could make up 20 -30% of overall global iPhone units over the next year."

He added, "a 4S would simply cost more and a 4S itself wouldn’t create a mid-tier market unless it was priced at $99 and the iPhone 4 went to $49 with the new iPhone at $199. We see this scenario as unlikely.”

As for iPods, Blair predicts Apple will discontinue the hard drive-based iPod classic while offering a updated iPod touch with an improved camera offering 2-3 megapixels rather than the current VGA resolution suitable only for FaceTime chats. The iPod touch is also expected to be sold in white and offer 3G data service plans similar to 3G iPad models.

Blair estimates Apple will sell 24-25 million iPhones in the third calendar quarter, with shipments growing to 27 million in the final quarter of 2011. That would result in sales of around 91 million iPhones for 2011, growth of 92 percent over the previous year.

The iPhone 5 announcement will also make Sprint a new carrier for iPhone 5, and Blair estimates that the carrier will drive significant volumes over the next year, adding between 4-5 million additional sales.

In China, Blair wrote that he expects Apple will add China Telecom (122 million subscribers) to its existing partnership with China Unicom (193 million subscribers) , but that it will not officially partner with China Mobile, the largest carrier in the world with 647 million subscribers (only 8 million of which have EDGE data service).



Apple has continued to sell iPhone 4 and the iPhone 3GS (originally released in 2009) in the face of a variety of new Android, BlackBerry, Windows Phone 7 and webOS devices, and despite being relatively ancient in comparison to other smartphone models now being sold, Apple's two phones are still the first and second most popular among consumers.