A while back, rumors began to circulate in the press that Apple (AAPL +0.10%) was preparing an updated 4-inch iPhone to replace the iPhone 5s. Early reports suggested that this phone would share many key internal components with the flagship iPhone 6s/6s Plus phones, such as the A9 processor and the inclusion of two gigabytes of new LPDDR4 memory.
However, a fresh report from Chinese website cnBeta (via MacRumors) claims that the updated 4-inch iPhone (reportedly to be called the "iPhone 5e" might have more in common with 2014's iPhone 6 than with the 2015 iPhone 6s/6s Plus. Let's take a closer look.
A8 processor, 1 gigabyte of memory
The report claims that the new device will come with Apple's A8 processor and 1 gigabyte of RAM, identical to what the iPhone 6/6 Plus came packed with. Those phones are hardly slouches -- they're still premium phones and still deliver very good performance across the board -- but using older, lower-performance components signals to customers that these newer 4-inch iPhones aren't flagships.
Although it would have been nice to see Apple include the higher performance A9 processor and endow the new 4-inch device with more memory, there are some fairly good reasons for the company to go with the A8 and 1 gigabyte of RAM.
First of all, the A8 is likely materially cheaper to build than the A9 as the former is both smaller and built on a less costly manufacturing process. Secondly, the A8 uses LPDDR3 which is older and thus cheaper to procure than the newer LPDDR4 that pairs with the A9.
Finally, I'd imagine that Apple needs as many ways to differentiate its latest flagships relative to older and/or cheaper models, and saddling the iPhone 5e with an A8 and just 1 gigabyte of memory is one way to do that.
Apple Pay support
The updated 4-inch iPhones are said to include support for its payments service known as Apple Pay. Given that Apple is working to establish an ecosystem around Apple Pay, it would make sense for the company to want to make sure that all of the iPhones that it sells support the feature.
The iPhone 5s already included Apple's Touch ID fingerprint reader, so the only real cost-adder relative to the iPhone 5s required to support this feature would be an NFC chip and related components. These shouldn't be all that expensive.
Same camera, new color option, 16/64 GB models, and VoLTE
The report claims that the new iPhone will feature the same camera specifications as the iPhone 5s. This is a bit unfortunate as the iPhone 6/6 Plus brought some very compelling camera features that probably would have worked nicely on this new 4-inch device and served as additional selling points.
On the bright side, Apple will reportedly be offering the updated iPhone 5s in a rose gold finish. Although this might seem like almost a triviality, I'd imagine that quite a few customers found the rose gold finish on the iPhone 6s/6s Plus appealing (this Fool did) and would like to see it on a smaller iPhone.
Next, the new 4-inch iPhones are said to come in 16 GB and 64 GB storage configurations. Considering that the iPhone 5s is currently only sold in either 16 GB or 32 GB storage configurations, this new storage tier structure should be more effective in encouraging 4-inch iPhone buyers to buy up the product stack.
Finally, the new 4-inch iPhones are said to support Voice-over-LTE calling, a feature that Apple first introduced in its iPhone 6/6 Plus smartphones.
Nice refresh, but not a game changer
It seems that Apple is doing an interesting, albeit conservative, update to its 4-inch iPhones. I don't think that this update will be enough to spark a significant upgrade/refresh cycle, but it should help to keep the company's 4-inch iPhone offerings reasonably fresh over the next year or so.
