Apple No-Contract iPhone Rumors Emerge Ahead of Earnings

Apple could be readying a $350, no-contract iPhone, according to a blog report. That rumor comes just as the company gears up for its July 19 earnings report.

Rumors of a low-cost, contract-free iPhone are emerging ahead of the company announcing its fiscal-year 2011 third-quarter results July 19.

Apple launched the iPad 2 in the first half of the year, and the thin tablet proved a bestseller. Based on the strength of that and other devices in its portfolio, most analysts expect Apple will post a solid set of earnings for the quarter. At the same time, they're already turning their attention to the second half of the year, when the company is expected to release a host of new software-including the Mac OS X "Lion" and iOS 5 operating systems-along with a new iPhone.

"The concern on [Wall Street] seems to be more about the outlook for the third quarter, ongoing supply constraints for the iPad and the timing of the iPhone introduction," Tony Ursillo, an analyst with Loomis Sayles & Co, told Reuters July 15.

For many, questions (and buzz) are growing around the nature of that iPhone rollout. The blog Boy Genius Report, citing "new information from an incredibly solid source," posted July 18 that Apple is planning to launch a no-contract iPhone priced at $350. "It's entirely possible that the low-cost iPhone will in fact be the iPhone 3GS," that posting added. "We are told that Apple will continue to sell the current iPhone 4 as well, finally giving the company a full range of devices in the lower, mid, and high-end price segments."

To be fair, Boy Genius Report has made wrong predictions in the past. What's indisputable, though, is that Apple faces a serious threat from manufacturers of Google Android smartphones, which are swallowing up share at both the high and low ends of the market. Apple's ability to blunt that spread could not only help determine its ultimate placement within the increasingly competitive smartphone market, but also have a serious effect on its bottom line.

For the moment, at least, most of the blogosphere's attention is focused on Apple's next-generation iPhone, popularly dubbed "iPhone 5." Boy Genius Report previously cited August as a possible start date for that device's launch. "According to our source, Apple may hold an event in the beginning or middle of August to announce the new iPhone, with availability to follow in the last week of August," read a June 21 posting, which predicted that Apple will utilize a "radical new case design" for the smartphone.

Morgan Stanley analyst Katy Huberty recently stated in a note to investors that the next iPhone "will begin production in mid to late August and ramp aggressively." Her information apparently came from talks with unnamed sources in Taiwan.

Bloomberg also reported June 21 that the next iPhone will debut in September and include the company's faster A5 processor, along with an 8-megapixel camera and the recently introduced iOS 5 mobile operating system. In addition, that report claimed Apple is developing a smaller, cheaper iPhone that utilizes "chips and displays of similar quality to today's iPhone 4." The latter device will apparently embrace the iPhone 4's design aesthetic.

Follow Nicholas Kolakowski on Twitter