Why the Apple iPhone 5 worries Android (U1)

Apple is planning on two new iPhone smartphones for a September release, a development that should have rival Android concerned, analysts say.

Mobile industry analysts say that Apple has already begun production on the next generation of its venerable smartphone, expected to feature the A5 processor from its iPad 2 cousin, and higher screen resolution.

The roll out is expected not only to boost Apple revenue, but also wrench away the market leader position from arch-rival Google.

At the moment, Google's Android platform reigns supreme among mobile users , having a healthy installation across a number of devices. But even the current iPhone models virtually halted this.

Couple this with the upcoming iPhone 5, and what some dub the iPhone Lite analysts are predicting that Google may need to step down from its No. 1 spot.

In our opinion, this is just the beginning of Android's share loss in the U.S., according to Needham analyst Charlie Wolf.

Android commanded 36.2 percent of worldwide smartphone market share in March.

But its month-to-month gain was just 3 percentage points, down from a 7.5-percentage-point gain in the December quarter, and a 9.5-percentage-point gain in the September quarter.

The slowing is because the Android platform fell from 52.4 percent of U.S. smartphone sales to 49.5 percent in the quarter - Android's first sequential loss in any region, he writes.

On the contrary, iPhone rose from 17.2 percent in December to 29.5 percent by March, according to IDC numbers.

Google declined to comment.

The migration of subscribers to the iPhone on the Verizon network should accelerate this fall when Apple coordinates the launch of iPhone 5 on the GSM and CDMA networks. The iPhone could also launch on the Sprint and T-Mobile networks.

Apple is also working to finish a cheaper version of the iPhone aimed at attracting customers in emerging markets.

This device would use chips and displays of similar quality to today's iPhone 4, according to people familiar with the matter.

Wolf believes it could even be a pre-paid phone, allowing for an emergence of what he calls an iPhone Lite.

The only way these second-tier licensees can survive is to compete on price rather than features. This, in turn, most likely will trigger a price war between Android licensees that could even engulf the name brand vendors.

September Release Date

The next generation of Apple's smartphone is starting to hit factories, ramping up for a September release date.

The consumer electronics giant has contracted out Catcher Technology of China, according to Jefferies & Co.'s Peter Misek, prepping for a production ramp-up in July.

Our checks and guidance from Catcher Technologies indicate

component orders beginning for the iPhone 4S, Misek said.

Catcher, the metal casing manufacturer for Apple, raised its outlook for its Q2 and for the second half, suggestion greater scale on its aluminum unibody products, Misek explained.

Misek told investors that Apple should be able to make 5 million to 10 million of the new phones in the September-ending fiscal Q4, and 17 million to 19 million iPhone of various models in that quarter, which would be an increase from his 16 million estimate for the current, June-ending quarter.

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