iPhone 5 Preview: Everything You Need to Know

The iPhone 5 launch on Wednesday, Sept. 12 is sure to be the most important event for tech investors this year. The Motley Fool will be hosting a live chat where our top tech analysts will answer your questions and break down what the announcement means for Apple and tech investors everywhere. Be sure to swing by Fool.com at 12:45 p.m. EDT next Wednesday for all your coverage of Apple's next big announcement.

We're now less than one week away from Apple's (Nasdaq: AAPL  ) iPhone 5 unveiling, which is set for next Wednesday. The whole mobile world will be anxiously watching for what Apple has up its sleeve, and investors are already banking on a device no one has ever officially publicly laid eyes on to lift the company to new heights and decimate the competition.

The apple of Apple's eye
The iPhone is easily Apple's most important product family, generating half of trailing-12-month sales. No other product even comes close, and even the core Mac business has already taken a backseat to the iPad as a revenue driver.

Product Family

TTM Sales

% of Total

iPhone $74.3 billion 50%
iPad $31.8 billion 21%
Mac $22.9 billion 15%
Music (iTunes) $7.9 billion 5%
iPod $5.9 billion 4%
Software, service, and other $3.3 billion 2%
Peripherals $2.7 billion 2%
Total $148.8 billion 100%

Source: SEC filings. TTM = trailing-12-month. Figures may not add precisely due to rounding.

The relative softness in iPhone unit sales last quarter limited Apple's overall results since it's such a major contributor to the top line. On top of that, reports estimated that Samsung's current flagship, the Google (Nasdaq: GOOG  ) Android-powered Galaxy S III, dethroned the iPhone 4S in August as the top-selling smartphone at most domestic wireless carriers.

Only at AT&T (NYSE: T  ) did the iPhone 4S lead the way, while at Verizon (NYSE: VZ  ) it was even pushed down to No. 3 as Google's Motorola Mobility subsidiary earned a second-place finish with its RAZR Maxx. Both Nokia (NYSE: NOK  ) and Motorola have just recently unveiled new flagship devices, the Lumia 920 and Droid RAZR HD, respectively, so the competition continues to intensify.

Apple needs this
It is imperative for Apple to release a blockbuster device if it hopes to satiate investors' appetite for growth and fend off competition among high-end smartphones, particularly from the Android camp.

The Apple rumor mill never sleeps, and constantly churns out new tidbits to drive speculation. That means that potential buyers are well aware that a new model is coming and postpone purchases accordingly, but it also means that careful watchers already have a pretty good idea of what to expect.

Getting touchy-feely
For the first time in the iPhone's history, Apple will be increasing the screen size from a 3.5-inch display to a 4-inch display. While Android rivals continue to offer just about every screen size imaginable, some up to nearly 5-inch displays, Apple is playing this spec conservatively. In order to slim down the device, Apple is reportedly using in-cell display technology, which integrates the touch sensors directly into the LCD and eliminates the need for a separate layer. However, if it turns out consumers really do want something bigger, the iPhone 5 may disappoint.

This will also be the first iPhone to feature 4G LTE data speeds, again a requisite to stay abreast with the Android competition. One advantage Apple may be able to wield in this department is battery life, as most LTE devices are notoriously short-lived.

The physical case is also being redesigned and follows in the unibody footsteps that Apple has taken throughout other product families. This will yield benefits such as a sturdier casing and physical space efficiencies. Supply chain leaks show a two-toned design with what appears to be glass windows at the top and bottom to allow radio signals to pass through, since metal obstructs these transmissions.

After nine years, Apple will also move to a smaller proprietary dock connector, shaking up the third-party accessory market in the process.

When can I get my hands on it?
The launch date is rumored to be Sept. 21, nine days after the unveiling. The launch happens to be when carriers have scheduled vacation blackouts for employees, as they'll need all the able bodies they can get to handle the onslaught of rabid iPhone buyers.

Apple is always quick to launch devices very shortly after introduction, an attempt to minimize the Osborne effect of consumers delaying purchases waiting for the new models, although there's little it can do about the rumor mill we all know (and love) at this point.

There's a lot more where that came from
The iPhone 4S was the fastest iPhone rollout so far, thanks to Tim Cook's operational prowess. The company continues to tap into additional market opportunities, recently getting into the domestic prepaid segment with Leap Wireless' Cricket and Sprint Nextel's Virgin Mobile. The iPhone 5 is also expected to bring technical compatibility with China Mobile's unique network standards, giving Apple access to the largest carrier in the world, with 688 million mobile subscribers, only 10% of which use 3G.

As with previous years, the new iPhone will bump down previous models a price point, which means that the overall lineup will also strengthen. Here's how the entry-level on-contract pricing should change.

Entry Price Point With Contract

Current

New*

$0 iPhone 3GS iPhone 4*
$99 iPhone 4 iPhone 4S*
$199 iPhone 4S iPhone 5*

Source: Apple. *Estimated.

The iPhone 4 is still a respectable device, especially for targeting lower-end and emerging markets. I'm expecting the iPhone 3GS, originally released ages ago in 2009, to be discontinued.

How to play the iPhone 5
Make no mistake: this product launch is Apple's most important for the entire year, since so much rides on the iPhone's success. Fortunately, there are numerous ways to profit on the iPhone 5 beyond Apple itself. I've detailed the most promising component suppliers that are expected in the iPhone 5 that investors can capitalize on, and it's included as a free bonus to subscribers of our new Apple research report. Sign up today and get a detailed comprehensive write-up, an iPhone 5 special report, as well as regular future updates for no additional cost! Just click here to get started.

Fool contributor Evan Niu owns shares of Apple, Verizon Communications, and AT&T, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of China Mobile and Apple. Motley Fool newsletter services have recommended buying shares of Apple and Google. Motley Fool newsletter services have also recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.
We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


Read/Post Comments (14) | Recommend This Article (125)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 07, 2012, at 11:26 AM, dkinseycfp wrote:

    Why doesn't this feel too exciting?

  • Report this Comment On September 07, 2012, at 11:39 AM, deemery wrote:

    It would be good if this article differentiated fact, from analysis, from informed speculation. A good example of the latter is screen size.

  • Report this Comment On September 07, 2012, at 11:41 AM, whyaduck1128 wrote:

    "Fortunately, there are numerous ways to profit on the iPhone 5 beyond Apple itself."

    Why? Is AAPL such a bad investment? It seems to me that it's been doing just fine.

  • Report this Comment On September 07, 2012, at 12:14 PM, venturen wrote:

    Is there anyone left that didn't have to buy the next device because the previous two were duds? Heck why doesn't Apple just have a yearly subscription based service with a product a year. I traded up to the a Samsung and couldn't be happier. Really how many obscure apps can you use? Bonus I replace the battery get another year. My two dead apple devices which mysterious died just after two years...sit comfortably in my draw.

  • Report this Comment On September 07, 2012, at 12:34 PM, lucasmonger wrote:

    As an Apple fanboy, I'm starting to get bored with new product releases. I'll upgrade my iPhone and iPad every 2 or 3 years to keep the CPU speedy, but we're just running out of new things to put into smartphones and tablets. The Android and Windows Phone 8 markets are also getting boring. Googorola, Microkia, and Amazon all had announcements this week and all I can say is "Meh..." The Motorola/Intel announcement on Sept 18th probably promises the same boredom.

    What could be exciting is if Apple staged all the leaked photos of a longer phone that looks like the 4/4S and while secretly building something else to surprise everyone in the world. Now that would be classic.

  • Report this Comment On September 07, 2012, at 1:12 PM, ric37 wrote:

    Interesting.. "Android-powered Galaxy S III, dethroned the iPhone 4S in August as the top-selling smartphone at most domestic wireless carriers"

    So it took until the month before the launch of a new iPhone device to open the door wide enough that the 4S was 'dethroned'. The competitions best model sold better that the iPhone 4S only in the month before the release of the iPhone model designed to replace the 4S. Hmmm, I am not really feeling the AAPL doom and gloom and why we need to focus so much on other avenues of investing... balance is good, but I get the impression we are trying to paint a skewed view.

  • Report this Comment On September 07, 2012, at 1:22 PM, JJYsailing34 wrote:

    You didn't tell me a thing about new features. give me more info on what the i5 can do.

  • Report this Comment On September 07, 2012, at 2:24 PM, TMFTypeoh wrote:

    "giving Apple access to the largest carrier in the world, with 688,000 mobile subscribers, only 10% of which use 3G."

    I think you meant 688 MILLION subs, not thousand.

    Brian

  • Report this Comment On September 07, 2012, at 2:50 PM, pancratski wrote:

    WOw, A bigger screen is the big advancement? Are they going to be sued by samsumg for coping thier screen size? Iphone 3 was a dud. My friends 3 is almost useless. All the einstiens at the genius bar were no help.

  • Report this Comment On September 07, 2012, at 2:55 PM, 48ozhalfgallons wrote:

    I'll get excited when it comes with a 3D printer and access to algorithms for delivery on the fly. Need an auto part or a kidney? Click here and print it! All for a grand.

  • Report this Comment On September 07, 2012, at 3:18 PM, RLHMDDABHPM wrote:

    Ha! Love the comments, esp. the 3D one (no such TV, etc. in this house!). I'm ready to buy a new (Verizon?) smartphone (it was going to be iphone 4S, to avoid "new product glitches", though may like better speed & a larger screen (really need to just talk to an ipad), though agree that .5" isn't much. Any foolish thoughts? Hopefully not a can of worms!!! Prob. either 1) iphone 4S

    2) the new iphone

    I have enough Mac products to at least lean that way (otherwise stated: I've been sucked in with a lot of others!) Do like/am familiar with Mac OS, & also am saving pennies for a "solid state" computer of some sort...sans spinning, crashing hard drive. Thanks!

  • Report this Comment On September 08, 2012, at 4:10 PM, Minow wrote:

    Correct-- me if I'm wrong, but I read or heard that the i phone 5 didn't have LTE, but instead was equipped with HSPA+, (High Speed Packet Access with mobile internet) which is a bridge to--LTE data like speeds, HSPA+ isn't LTE!

  • Report this Comment On September 09, 2012, at 12:31 AM, pkguitarman wrote:

    I still have a 3G but will now upgrade to a 5 when the lines at the Apple stores thin out. Apple stock will be at $1,000 a share before long and I am sure glad I held on to the many shares I bought at $80. Most people want an iPhone. No matter how many other phones are sold, they all seem like off brands compared to the iPhone. The iPhone 5 launch will be huge.

  • Report this Comment On September 09, 2012, at 9:06 PM, applefan1 wrote:

    The comparison of a YEAR OLD product/OS to a brand new product/OS is the JUST RIDICULOUS.

    Personally, I think they do this on purpose so they can make this whole thing exciting.

    After the iPhone 5 numbers come in, it will be something like iPhone 5 dethrones the Galaxy S III, by selling 20 Million Units in the first month.

    iMac and Mac Mini sales have dropped, again, because they are models that have reached EOL and there is a pent up demand. This happens with ALL products. Apple just doesn't flood the market with a bunch of useless model computers like the PC industry has been doing.

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