Let the iPhone 5S Rumors Begin

There's no better way to kick off the new year than with a fresh batch of iPhone rumors. The Apple (NASDAQ: AAPL  ) rumor mill took a couple days off for the holidays, but it's time for it to get back to work churning out the latest rumblings.

Topeka Capital Markets analyst Brian White, one of the Street's most vocal Apple bulls, is reiterating his buy rating on the iPhone maker along with his $1,111 price target -- the same one that represents over 100% upside from current prices.

Testing for color
Based on his "checks," White believes that the next iPhone, likely dubbed the "iPhone 5S" will offer more choices for buyers than ever before, including "more colors and screen sizes." Potentially following in the footsteps of the newest iPod Touch, Apple could offer similar color configurations including pink, yellow, and blue, in addition to the current black and white models.

iPod Touch color options. Source: Apple.

Adding the color choices to the iPod Touch may have been something of a "testing ground" paving the way for a similar move in the iPhone.

Apple's been known to make these types of manufacturing tests on lower-volume products before transitioning those processes to higher-volume offerings. For example, the company tested Samsung's newer 32-nanometer manufacturing process on a revised A5 chip found in the Apple TV and iPad 2 before moving the A6 to the same node.

White thinks the addition of color choices would help boost demand further and customers will respond positively to "a wide array of vibrant colors that only Apple can deliver." Furthermore, this same strategy may find its way to the iPad. While consumers may appreciate a blue iPad, Apple bear and bond guru Jeffrey Gundlach won't. A couple months ago he mocked the possibility of "tooty-fruity" iPad colors as evidence that Apple is losing its innovative touch.

Be like Samsung and Android?
Even more interesting is the notion that Apple would add new screen sizes, especially so shortly after adding a 4-inch display to the iOS lineup in 2012. White thinks that Apple will launch the iPhone 5S with multiple screen sizes that are better able to target different market segments, including lower-priced iPhones with smaller displays that could do well in China and India.

Apple might also go larger than the 4-inch display found in the iPhone 5. Maybe it'll copy Samsung after all and approach phablet country. The South Korean conglomerate and iFrenemy has certainly proved that there's very much a market for larger devices.

Adding a new screen size risks fragmenting the platform, though, which is one of Google (NASDAQ: GOOGL  ) Android's biggest weaknesses since developers have to target a plethora of resolutions. Android has built-in scaling tools, but that's also had the side effect of making developers lazy when it comes to optimizing apps for Android tablets.

There are currently three resolutions for iOS on iPhones and iPod Touches (320 x 480, 640 x 960, and 640 x 1,136). Moving that figure to four or more resolutions could inconvenience developers, but it's still much less daunting than the Android camp. Google has 16 different classifications for Android displays, based on size and density.

Moving on down
Analysts have been speculating for years on whether Apple would move downmarket with a lower-priced iPhone. Apple has historically been content maintaining premium pricing and letting competitors fight over lower-end market segments.

On the flip side, premium iPhone pricing in countries that don't use the subsidy model (like India) has held back adoption. There's undoubtedly opportunity in lower-priced market segments, but it's dubious how appealing that is for Apple, since it likes to maintain its premium brand and associated margins.

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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 January 03, 2013, at 3:23 AM, luchopanda wrote:

    Steve told Tim to: 'be yourself.' He hasn't done that yet. He doesn't have to describe new products as "cool."… Find your own voice Tim!

  • Report this Comment On January 03, 2013, at 9:02 AM, lucasmonger wrote:

    Certainly offering a choice of a smaller and larger screen size for people who have smaller or larger hands or need the larger size for bad eyes would be in order, but I don't think they will deviate much from the current iPhone 4S and 5 screen resolutions. Colors would be nice, but it also makes it tougher to find the one and you might have to compromise while shopping at stores.

    A real fun could be if Apple could buy Sprint or Tmobile and go back to the unlimited data plans that came with the original iPhone. Price it agressively $40 per month for a single phone and $100 per month for a family of 4 with an additional $25 per phone and this should cause a shakedown in the wireless stronghold that AT&T and Verizon currently have.

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