Apple is expected to begin preliminary builds of the next iPhone, dubbed iPhone 6 or iPhone 5S, in March, in preparation for a June or July launch, an analyst has said.

Apple is currently testing two new iPhone prototypes, Jefferies analyst Peter Misek told investors in a note this week. One of the prototypes is the 'iPhone 5S', said Misek, while the other is likely to be the widely speculated cheaper iPhone.

Misek has predicted that the next iPhone will be 0.8 inches bigger than the iPhone 5's at 4.8 inches diagonally. SEE: iPhone 6 rumour roundup

As for the cheaper iPhone, Misek said: "Similar to the iPad mini, we expect a concentrated low-cost iPhone rather than a 'cheap' one. Likely specs: polycarbonate case with 4in non-Retina display and no LTE."

Misek explains that he expects that the rumoured cheaper iPhone will not have much of an impact on Apple's earnings per share, because, while it would increase the company's market share, it would also decrease its gross margins.

In his note, Misek said that he expects demand for the iPhone 5 to decrease as word of the 'iPhone 5S' begins to spread. He thinks that Apple will sell 44 million iPhones in the March quarter, which he says is "still well above" recent concerns that suggest Apple's shipments may fall way below 40 million.

On Sunday, the Wall Street Journal reported that Apple had halved its orders for the iPhone 5. The report led Apple's share price to dip below $500 per share on Monday, but some suggest that the WSJ report was flawed, and that there may have been some stock manipulation involved.

However, should the report have some truth to it, Misek believes that the decrease in orders is unlikely to be linked to weak demand for the iPhone 5, but instead due to an assembly bottleneck that caused component inventories to rise in the December quarter, as well as the upcoming start of production of the next iPhone. He also said that he believes demand may be in line or "slightly below optimistic expectations."

[Via Apple Insider]

See also:

'Apple should make cheaper iPhone' says former CEO John Sculley

New Mac Pro, iPhone 6, Retina iPad mini 2 most wanted Apple products for 2013

iPhone 6 rumour rollup for week ending 11 January

Is this what Apple's iPhone 6 will look like?

Apple analyst reduces AAPL targets on cheap iPhone margin concerns

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