iPhone 4S vs. iPhone 5: Which Is It?

It seems those out in analyst land can't make up their mind regarding the next generation Apple iPhone.

Some are saying it will be a slightly better version of the iPhone 4, dubbed the iPhone 4S. Others are saying it will be an iPhone 5. One has even said it will be both. Every analyst has predicted an outcome and only one thing seems certain: a new Apple phone will come in September.

Last week, Deutsche Bank analyst Chris Whitmore said in a note to investors that Apple will release not one, but two iPhones this upcoming fall. He says one will be a fully featured iPhone 5, while another will be a 4S, a cut-back mid-range phone.

With Nokia and RIMM struggling the time is right for Apple to aggressively penetrate the mid range smart-phone market (i.e. $300-500 category) to dramatically expand its [total addressable market] and market share, Whitmore said in a note.

Keith Bachman, analyst at BMO Capital, did not agree with this and said there would only be an iPhone 4S. He did not see the existence of a low or mid-range phone and said the iPhone 4S would be the next-generation.

Another analyst, Jefferies & Co. analyst Peter Misek agreed with Bachman. He said because Apple is not introducing the next generation iPhone at the WWDC, like the company has usually done in the past, he does not expect it to be a major upgrade.

We believe the likelihood of the iPhone 5 launch in September including LTE [Long-Term Evolution] is now remote, Misek said. According to our industry checks, the device should be called iPhone 4S and include minor cosmetic changes, better cameras, A5 dual-core processor and HSPA+ [EvolvedHigh-Speed Packet Access] support.

Following this, a hack from the retiring group Lulzsec on AT&T revealed hinted there is an LTE (4G) iPhone and iPad on the horizon in either August or September of this year. The hack has in-house materials from AT&T, which state the company needs to prepare for an iPhone LTE migration by August or September of this year.

The latest iPhone rumor comes from Mike Abramsky of RBC Capital, who said there will be an iPhone 5 released in September with all new functions. Abramsky went on to predict that instead of a cheaper pre-paid iPhone, which is what some people think will be introduced in addition to an iPhone 5, he thinks Apple may offer consumers a free iPhon, the 3GS.

While a $49 iPhone is already available (AT&T), psychologically a $0 iPhone provides a compelling offer, Abramsky wrote in a note to investors.

Abramsky said in a survey he did, 14% of possible consumers said they very/somewhat likely to buy the iPhone 3GS for free with 2-year contract, which is more than buying interest for the iPad (13%) and original iPhone (9%). In his opinion, a free iPhone would add $7 billion of revenue and $1.82 of EPS to the company's income. He also says the company would be able to maintain gross margins.