According to Trevor Sheridan of Apple'N'Apps, Apple is looking to release an "iCloud iPhone" this year, alongside the launch of the iPhone 5.
The iCloud device will use the same parts as the iPhone 4, but with less memory and storage (to save money), and could cost $0 with contract.
Integrated directly into the cloud, the iCloud iPhone will help Apple keeps its 40%+ margins whilst releasing a device that can compete on a price level with low-end Android phones.
Says Sheridan:
Integrated directly into the cloud, the iCloud iPhone will help Apple keeps its 40%+ margins whilst releasing a device that can compete on a price level with low-end Android phones.
Says Sheridan:
The iPhone 5 will be a quality upgrade, but the star of the show will be the cheaper iCloud iPhone alternative. Apple wants to offer a lower priced iPhone while still maintaining their industry leading profit margins.
According to our sources, Apple is going to do this by using less on board Flash memory which are also falling in price. When looking at the iSuppli cost breakdown of the parts of the iPhone 4, the storage accounts for 15% of the cost to build the device, and that's true for the 3GS as well. Reducing 15% of the cost across millions of units is a substantial savings. The iCloud model will be for users who will want to use the iCloud heavily for storage, and keep a lot less on the iPhone itself. This will also help Apple make iCloud a feature by itself and reason to use the entire Apple ecosystem.
