So, rumours are getting stronger and stronger that Apple will launch a 'budget' iPhone that is going to replace the iPhone 4/4S. But why would Apple do this? Isn't the iPhone 4 (and more or less also the 4S) the 'budget iPhone'? Let's have a look. 2011 Budget: iPhone 3GS ($0) Mid: iPhone 4 ($99) High: iPhone 4S ($199) 2012 Budget: iPhone 4 ($0) Mid: iPhone 4S ($99) High: iPhone 5 ($199) The most logical thing to do for Apple this year, 2013, would be: Budget: iPhone 4S ($0) Mid: iPhone 5 ($99) High: iPhone 5S ($199) A budget iPhone doesn't fit in there. What are carriers going to do? Give a customer $100 to get an "iPhone Lite"? No. There are some very obvious reasons why Apple wants to get rid of the iPhone 4S, and thus it will be introducing an "iPhone Lite" that is cheaper to build, but yet offers equal (or more) functionality as the iPhone 4S. Short story with bulletpoints (below these bulletpoints, you'll find the long story). - 4-inch display: every iPhone sold will have the same 4-inch display (unification) - AirDrop (they will probably push this feature, iPhone 4S misses essential hardware to support AirDrop) - Materials (they can now drop glass on the back + the expensive antennaband, plastic will be much cheaper (both in material costs and production)) (?) - 8 MP to 5 MP camera? Not sure about this one, but I wouldn't be surprised - Lightning connector: every iPhone sold will have a Lightning connector, this is important as the $0 and $99 iPhone are becoming more popular under customers Conclusion: not only will a "budget iPhone" be cheaper to produce, but it is also in the best interest of Apple as a whole because of the push for one single screensize, AirDrop, profit margins and maybe most importantly: Lightning connector. -- A few reasons to replace the 'budget iPhone 4S' with an all-new 'budget iPhone Lite' Unification: 4-inch Retina Display, same A5 chip Not the crucial factor, but I think that Apple wants to get rid of the 3.5" iPhone. I think they want one uniform screen size (for now), and with an iPhone 4S that isn't going to happen. The chip they will use? An A5 chip: the same one as in the iPod touch with 4-inch display. Air Drop (Wi-Fi) Apple now has announced AirDrop for iOS 7. It works with iPhone 5 (our mid-end phone) and it will work for the iPhone 5S (the high-end phone). Curious enough, it won't work on the iPhone 4S because the Wi-Fi hardware isn't there to support it. I think Apple is going to push for AirDrop, and they can't do that when they are selling an iPhone 4S. My guess: they want the new 802.11a/b/g/n Wi-Fi-chip (just like in the latest iPod touch). Materials: from glass to plastic, possibly from 8 MP to 5 MP (camera) The margins on iPhones for Apple are shrinking: the antennaband and glass on front and back are much more expensive than 'just using' a plastic back. Going from a glass back + antennaband to 'just plastic' is going to increase profit margins. The iPhone 4S has an 8 MP camera, but I wouldn't be surprised if Apple decided to go for the 5 MP camera found in the iPod touch. Lightning connector Again: more and more people are going for the cheaper iPhones. Apple is trying to push everyone to go use the new connector, but it doesn't help that (apparently) close to 50% of all sold iPhones still have the old 30-pin connector. The "iPhone Lite" will use the Lightning connector and thus, starting this fall, every single iPhone sold will have a lightning connector. It's good for Apple. (It's new) What sounds better in marketing? - "Here, go buy our 2-year old iPhone" - "Here, go buy our just-announced and just-released iPhone with shiny new colorus"