Will the iPhone 5S Save Apple?

Could the cure to Apple's (NASDAQ: AAPL  ) iPhone blues be another iPhone?

Jefferies analyst Peter Misek wrote yesterday that Apple may hit the market with its next smartphone as early as June or July.

An early upgrade cycle isn't necessarily unusual for Apple. When the tech giant introduced the new iPad two months ago, it came just eight months after the third generation of the iconic tablet. Apple even raised the stakes by rolling out the lower-priced iPad Mini at the same time.

However, it's clear that sooner will be better than later at a time when the market's starting to lose faith in the magnetism of the iPhone 5. Even before this week's unconfirmed report of Apple scaling back supplier orders for iPhone 5 screens, analysts performing channel checks were talking down their projections.

Misek himself is now lowering his shipment expectations for the current quarter from 48 million to 44 million. It's certainly not as bad as some of the gloomier revisions out there, but it's just one more connected pro hosing down his forecast.

The iPhone 5 isn't that bad
What held back the iPhone 5 from being as big a success as optimists were originally expecting? Was the slightly larger screen just not big enough? Was the shift to 4G LTE undermined, domestically at least, by Apple's largest carriers?

There could be something to that. AT&T and Verizon -- the country's two largest wireless service providers and the leading iPhone carriers -- drew the line at upgrading existing customers on grandfathered plans for unlimited data. AT&T and Verizon shifting to tiered pricing for longtime customers and the push toward shared data plans may be great for the wireless carriers, but customers aren't falling into the 4G LTE trap -- especially since those faster speeds will only make the metered data go faster.

The iPhone 5 is also an upgrade hassle for owners of earlier Apple models. The form factor is different, so that means investing in new cases. The charging connector has also changed.

In sum, there may be more working against the iPhone 5 than in its favor. No one should be surprised at recent reports indicating that a greater percentage of iPhone buyers are turning to the cheaper older generations that Apple is making available than the prior year's upgrade cycle.

There are too many battles to fight
When the original iPhone came out there really wasn't anything like it, especially when Apple raised the stakes with the App Store a year later.

It's a different world these days. Android devices continue to get better and cheaper, and even the App Store advantage will shift to Android as Google's (NASDAQ: GOOGL  ) open-source platform is expected to overtake Apple in the number of applications available later this year. Android activations already passed Apple a couple of years ago. The gaps have narrowed for the design and interface advantages that Apple prices at a premium.

The fight doesn't end there.

We're now less than two weeks away from what may be the most important day in the recent history of Research In Motion (NASDAQ: BBRY  ) . The BlackBerry company is peeling back the curtain on the new BlackBerry 10 mobile operating system and the new devices to take advantage of the potentially bar-raising platform.

The chances of RIM succeeding aren't great, but it will at least initially create more noise in Apple's high-end market. The move will introduce a legitimate choice, especially for customers at the enterprise level that are familiar with BlackBerry.

If RIM's revival begins gaining any traction next month, it's definitely in Apple's best interests to up the ante in June than to wait until September to match the iPhone 5's rollout last year.

This may be the end to Apple's annual iPhone refreshes. The updates will have to come sooner, because no one's telling Samsung and other Android device makers that there's a time constraint between releases.

An iPhone by any other name
Misek refers to the new smartphone as the iPhone 5S. He sees Apple testing two prototypes by March, including the widely reported lower-cost iPhone.

Would going with the 5S moniker be a mistake? Folks weren't exactly wowed initially by the iPhone 4S two years ago. It went on to break sales records -- just as the iPhone 5 is doing right now -- but there's always the connotation that simply slapping a Superman "S" to a generation the way that Apple has done with the 3GS and 4S means that it won't be a substantial update.

If the Apple bears grow louder between now and then, maybe Apple will need a more dramatic shift. Maybe the days of simply numbering generations are over. Will you really be buying an iPhone 11S in 10 years? However, what really matters now is that Apple puts out a head-turning upgrade before the investor negativity begins to diminish the Apple brand for consumers.

The clock's ticking. 

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Read/Post Comments (16) | Recommend This Article (8)

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 17, 2013, at 6:15 PM, lakawak wrote:

    I think everyone just assumed that they would come out with a new iPhone in the summer. It wouldn't be an early release. It would be on their normal schedule.

  • Report this Comment On January 17, 2013, at 6:37 PM, TimKnows wrote:

    They can come out with a phone every month and it won't solve the problem of their ancient OS and a boring experience. Apples days are over now, they are boring, outdated when they launch and always use old technology. Samsung runs circles around them and can sell as many as they can make even with a free OS base. Apple cannot complete in this arena any more. They just don't know this yet. Let's see those colors, they will make everyone want to upgrade their phones right away.

  • Report this Comment On January 17, 2013, at 6:40 PM, JesusQuintanaJr wrote:

    Save Apple? The iPhone 5 isn't that bad? Where do people come up with this nonsense? Though the stock price is getting battered the company itself is doing quite well.

    Demand for the iPhone 5 was so large that it was nearly impossible to get one for months. Apple is just now catching up to demand. Foxconn is even having employees work over the Chinese New Year to keep pace.

  • Report this Comment On January 17, 2013, at 6:42 PM, daveshouston wrote:

    This article is just overloaded with speculation vs. facts. Apple will be just fine.

  • Report this Comment On January 17, 2013, at 6:43 PM, Netteligent09 wrote:

    Apple should reconsider an affordable iPhone and other products. There are huge billion dollars market waiting for Apple.

  • Report this Comment On January 17, 2013, at 6:47 PM, daveshouston wrote:

    @TimKnows - You couldn't be more wrong if you tried. Samsung is nothing but a hardware company. They depend on Google for software and the Android ecosystem. Hardware is the easiest of those three pieces.

    Apple customers always poll at 95% plus on customer satisfaction. When someone buys an iPhone pretty soon they want a Mac and an iPad. When it comes time to upgrade, they never ask 'which brand?', they only ask 'which Apple model?' Apple's customers aren't going to even look at Android's inferior fragmented model.

  • Report this Comment On January 17, 2013, at 7:02 PM, differenttake wrote:

    I think everyone is confusing a drop in stock price as meaning i-phone 5 was a isn't. Sales will be off the charts for all Apple products, all will be up at least 20% from last year....don't forget to factor in last year had an extra sales week.

    Except: they may "miss" the ridiculous expectations of some analysts seem to push but YOY will look GREAT.

    daveshuston is right on... hardware is easiest and is much more fragile a place to be, anyone building Droid stands a chance at having "the next big thing" and kicking the snot outta you.

    Apple has the whole system of tablets, phones, cloud, apps and laptops and although overlooked they have an Apple TV now which works great controlling and interfacing all those devices and info they have onto the big screen.

  • Report this Comment On January 17, 2013, at 7:11 PM, Jeagan1999 wrote:

    I remember when I got my first Blackberry for work...boy did it suck! So I went out and bought my own iPhone and it was amazing. Gave the Blackberry back to HR and told them I didn't want it or need it! Remained a loyal iPhone user until last year, then a few colleagues said they were switching over to a Samsung Galaxy Android phone. They said it was the latest, greatest I went along and joined them. What a piece of garbage. Poor sound quality, even poorer build quality (broke during the warranty period so I had it replaced) and no where near the number of usable apps...CRAPOLA! So for Christmas I went out and got myself the iPhone 5 and I LOVE IT! Slim, light weight, sharp screen and FAST, FAST, FAST! So from now on I will stick with Apple! Samsung can sell a billion of their cheap garbage phones...and I will happily pay more for Apple quality!

  • Report this Comment On January 17, 2013, at 7:46 PM, Kjh007 wrote:

    What many people fail to realize... How many phones, makes models , platforms, fall under android... And they ALL compete with ONE PHONE...!

    There is nothing built and sold today that matches and Apple product. I picked up a coworkers Samsung yesterday to check it out and was embarrassed for him that he carried that piece of junk. The iPhone is not only the pioneer for what all smartphones try to be, but continues to lead the pack.

  • Report this Comment On January 17, 2013, at 7:59 PM, thebestofthebest wrote:

    @ daveshouston & differenttake...

    HAHAHAHAHA. You guys are so blind. Go to Wikipedia and type in iphone, then go to the bottom of the page where it says Mexico and Brazil. It will blow your mind.

    The Iphone 6243 couldn't save that company.

    Google is climbing those polls. What the article doesn't talk about is Microsoft WP8 climbing the charts and the high demand across the world. Presales were twice that of apple iphone. Samsung outsold iphone by 3-1. You guys might want to do some reading before you troll the boards again.

  • Report this Comment On January 17, 2013, at 8:36 PM, vijitc wrote:

    Apple is trouble? Initially when I saw this title, I though hardly. They still have the best phone on the market. But then I thought about my own mobile desires. I am an executive with a Samsung Galaxy S3. I have had it for 7 months and while its does everything, it is an underwhelming product and handles my business requirements poorly. I won't bore you with the details. My colleagues have the iPhone and while I prefer the user experience of that phone, it is by no means compelling enough to switch. That is just a waste of good money. Its still a lateral move. Now I have been keeping an eye on RIM. Their new offering seems to have all the things I desperately want that is missing in the Galaxy. So it seems like the iPhone might just get RIMMED just like how RIM got APPLED on the high end business market. I am anxiously waiting for their new Z10. On the consumer side, with much cheaper products like the Nexus 4, apple could also be seriously challenged in that market if they are not already. So while I never thought that the iPhone may be in trouble, now I am thinking otherwise.

  • Report this Comment On January 17, 2013, at 8:41 PM, Shelly2884 wrote:

    I am getting tired of the negative slants of these articles where the writers slant their stories almost a if they are being paid to raise Apple doubts. Wish someone would investigate what appears to be a stock manipulation.

    Apple does not need to be saved. It's revenue and profit and all other factors are solid. The next IPHONE will simply be the next Phone followed by ano product thereafter.

    Stop the negatives, Apple has been doing great and will continue to be great.

  • Report this Comment On January 17, 2013, at 11:28 PM, lucasmonger wrote:

    Apple is not in need of saving. Even if they are #2 (or 3, or 4) in phones they're making plenty of money.

  • Report this Comment On January 18, 2013, at 7:44 AM, jdmeck wrote:

    What an ass. Apple does not need saving. Don't confuse stock and company. Apple as a company is doing far better than any other company in the world. They will continue to be a money machine for years to come, regardless of weather or not they sell the most of anything.

  • Report this Comment On January 18, 2013, at 8:16 AM, magnaman1969 wrote:

    With the news that RIM will license it's secure email network to iOS and Android phones...maybe the iPhone 5S has a chance!!

    But i'd much rather have my money in RIMM on that news!!!!

  • Report this Comment On January 21, 2013, at 5:49 AM, novalla wrote:

    Will apple die?

    I don't think so, althought iphone 5 vs galaxy s4 and the result is not so outstanding, but I think there are more and more apple fans is the true.

    Just view ipadmates or other online store, I think, iphone 5S is still a cool phone to own.

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