iPhone 4S Contracts pose a risk to the potential of the iPhone 5

Watch out for the masses of iPhone 5 rumors to come out over the next couple of months as the iPad 3 was unveiled today. Don’t get your hopes up though, it’s unlikely that Apple will announce a major release after the recent unveiling of the iPad 3. The iPhone 5 is due to come out fall 2012, about a year later then the iPhone 4S. If Apple truly wants to compete with the highly anticipated Android smartphones, they best be releasing it ahead of schedule, but this could have some implications.
In October 2011, the iPhone 4S was released to the public. Most people cut costs going on a contract rather then buying it outright, but if the iPhone 5 was to be released in fall 2012, Apple’s sales would reduce greatly. AT&T users shouldn’t have too much of a problem with only a twelve to eighteen month wait for their contract. On the contrary, Verizon users would have to wait at least twenty months before upgrading to the iPhone 5.

Apple plans to counter this issue but no official word from them yet. Analysts suggest that Apple should subsidize the price of the iPhone 5 to allow those stuck on contracts to purchase the iPhone 5 at a lower price. But it’s a double edged sword. If Apple were to release the iPhone 5 in fall 2012, this would greatly reduce the number of sales because the amount of people on contracts, but if they were to subsidize the cost of the iPhone 5, this would limit the full potential of the iPhone 4S, so what will Apple do?
Stay tuned for more updates.