Analyst: iPhone 5C to phase out iPhone 5, due on China Mobile in Q3

Tim Cook unveils iPhone 5C (Martin Hajek 002)

KGI Securities’ Ming-Chi Kuo has built a reputation of the most reliable Apple analyst out there who has accurately predicted a number of Apple product updates (sans the timetable).

He’s out with a new report for clients Monday morning, sharing interesting observations regarding Apple’s upcoming iPhone 5C, also known as the budget iPhone.

The biggest takeaway: the iPhone 5C will be priced between $400 and $500, which makes it a mid-tier handset rather than cheap, and is expected to be released to China Mobile’s 700+ million subscribers in Fall, potentially accounting for penetration of TDD-LTE to 25 percent in iPhone 5S and 35 percent in iPhone 5C shipments…

He thinks (via AppleInsider) the plastic iPhone 5C will be offered in 16/32GB flavors and priced $200 less than the iPhone 5S. The analyst is also expecting Apple will axe the iPhone 4 because its hardware is inadequate to run on iOS7 and is adamant the iPhone 4S will live on at least through year ed.

The 5C, Kuo writes, should phase out the current-generation iPhone 5 this Fall due to similar features (sans the plastic enclosure) as the 5C has been designed as a mid-range replacement for the iPhone 5.

We’ve learned that the iPhone 5 line will be terminated from 4Q13, while the iPhone 4S line will carry on. From this, we infer that iPhone 5C is launched to replace iPhone 5. In other words, the 5C model will be positioned as midrange. We forecast its retail price to be US$400-500.

We expect iPhone 5S, iPhone 5C, iPhone 4S and iPhone 4 will fall into the price ranges of US$600-700, US$400-500, US$300-400 and US$200-300, respectively, in the new product cycle.

In a nutshell, the iPhone 5C will be to the iPhone 5S what the iPhone 4S is to the iPhone 5, a cheaper alternative with not as sophisticated hardware and features.

iPhone 5S (gold, two-up, left angled)

On a final note, Kuo is projecting 5.2 million iPhone 5S and 8.4 million iPhone 5C sales in the third quarter of this year. As for the Christmas quarter, Apple should ship 28 million iPhone 5S units and 18.7 million iPhone 5C units.

Apple should announce both the iPhone 5S and iPhone 5C at a media event on September 10.