Rumours are once again circulating that Apple will launch a cheaper version of iPhone during 2013. Originating from Digitimes, these rumours have been picked up and expanded upon by a wide variety of sources. This is in fact not the first time that these rumours have gotten about – very similar rumours of a cheaper iPhone circulated in 2011 and 2012.

Apple in fact does have a cheaper iPhone. Each year Apple introduces a new model, and then moves the current model, in a single option, “down” to be a cheaper version. Typically the previous model to that goes to the very bottom of the current list. A review of the the Apple website shows that there are, as at this writing, 3 iPhone models at 3 price points – the flagship iPhone 5, the iPhone 4S and the iPhone 4.

In the past I would’ve been skeptical of these rumours, as I was regarding the rumours of a new iPad in March. Apple’s behaviour regarding refreshes of products is fairly predictable – they tend to do one refresh a year on consumer type products (iPad, iPhone, iPod), and every 12-18 months for their computers. They tend to maintain the price-point for the new models, and bring down the price of the old models that are being used as low end units.

Although they are somewhat predictable, the wild card is they are not afraid to change something when it make sense – for technology, market, supply chain or business reasons. The removal of floppy disks and more recently optical drives from notebook and desktops are oft cited examples. Dropping Fireware for Thunderbolt, and recently the 30-pin iDevice connector for Lightning are also characteristic.

This time around, I think that it is likely that Apple will introduce a cheaper iPhone model (or models). I’ll give it a 75% probability.

There are two reasons – one major and one less so – driving my opinion.

1. The afore-cited switch to Lightning as the connector means that Apple is supporting two standards – the 30 pin connector for the older iPhone 4 and 4S models, and Lightning for the iPhone 5. This means more parts in spare parts, on retail shelves and of course in the production supply chain. It also splits the customer base, meaning interoperability between individuals and devices, including cars is impacted. In year one, this split is natural, and okay. But in year 2 and beyond, the gap will need to be closed.
2. The different screen size means Apple and developers need to build allowances for both. I’m less sure about the validity of this reason, as its possible one of the hallmarks of differentitation will be the larger screen size for the premium model, and the smaller size for the budget model. However, my hunch is that the size will be consolidated.

Now its not just a matter of swapping the connector on say the iPhone 4S, as the 30-pin connector takes up a lot of room, comparatively. Changing the connector is likely to involve a fundamental design change.

So my prediction is that we will see the continuation of three models when the iPhone 5S (assuming the naming convention continues) later this year:

• The iPhone 5S (in 32GB, 64GB and 128GB models)
• The iPhone 5 (in 16GB) as a mid-range model
• The low-cost iPhone (probably in 16GB)

Note that I am predicting a bump in the memory configurations. This is probably wishful thinking, but its about time.

Anyway, it will be interesting to see how this all pans out.