Let’s play the speculation game. Apple currently sells 11 versions of the iPhone:

• (free) iPhone 3GS, black, 8GB, GSM

• ($99) iPhone 4, black, 8GB, CDMA
• ($99) iPhone 4, white, 8GB, CDMA
• ($99) iPhone 4, black, 8GB, GSM
• ($99) iPhone 4, white, 8GB, GSM

• ($199) iPhone 4S, black, 16GB
• ($199) iPhone 4S, white, 16GB

• ($299) iPhone 4S, black, 32GB
• ($299) iPhone 4S, white, 32GB

• ($399) iPhone 4S, black, 64GB
• ($399) iPhone 4S, white, 64GB

Even though there are 11 versions, customers view the lineup as having just three variants (3GS, 4, 4S). Then they get to chose color and storage size.

On the 12th, Apple will presumably start selling an iPhone 5 that would most likely take over the iPhone 4S’ position in the lineup. The 3GS will almost certainly be killed on the 12th. It was introduced in 2009, has been in service for three and a half years and has done its job well.

Assuming Apple continues with their strategy of moving previous generations of the iPhone down the ladder in their pricing umbrella, the lineup would look something like this:

• (free) iPhone 4, black, 8GB, CDMA
• (free) iPhone 4, white, 8GB, CDMA
• (free) iPhone 4, black, 8GB, GSM
• (free) iPhone 4, white, 8GB, GSM

• ($99) iPhone 4S, black, 16GB
• ($99) iPhone 4S, white, 16GB

• ($199) iPhone 5, black, 16GB
• ($199) iPhone 5, white, 16GB

• ($299) iPhone 5, black, 32GB
• ($299) iPhone 5, white, 32GB

• ($399) iPhone 5, black, 64GB
• ($399) iPhone 5, white, 64GB

The lineup would actually increase to 12 models and customers would still view the lineup as having three variants (4, 4S, 5).

Looking at the iPhone 4 has me wondering if Apple should kill it as well. For one thing, Apple has to produce four different versions because of the different antennas. That alone might be enough to kill it.

Then you start looking at the internal components. The iPhone 4 and 4th generation iPod touch are the last iOS devices to use the A4 chip. Variants of the 4S’ A5 chip are used in the iPad 2, Apple TV, and the new iPad. It’s been rumored that the iPad mini may use the same hardware as the iPad 2. Obviously that means that a lot more A5/A5X chips are in production than A4 chips. At a certain point, despite the fact that the A4 is older and perhaps cheaper, economies of scale kick in and it becomes more expensive to produce older stuff than newer stuff. Extend idea to everything else about the iPhone 4 that is older gen tech.

So what if instead of producing the iPhone 4, Apple created two pricing tiers of the iPhone 4S? One free with contract and one that would sell at $99?  

That lineup might look something like this:

• (free) iPhone 4S, black, 8GB
• (free) iPhone 4S, white, 8GB

• ($99) iPhone 4S, black, 16GB
• ($99) iPhone 4S, white, 16GB

• ($199) iPhone 5, black, 16GB
• ($199) iPhone 5, white, 16GB

• ($299) iPhone 5, black, 32GB
• ($299) iPhone 5, white, 32GB

• ($399) iPhone 5, black, 64GB
• ($399) iPhone 5, white, 64GB

To make this lineup work, I created a 8GB version of the iPhone 4S that doesn’t currently exist, but would be a somewhat easy change to make.

That would reduce the lineup to just 10 models and customers would see two variants instead of three.

For Apple the benefits would be huge. The production and supply chain would be simplified, you would be able to buy more in bulk for cheaper, it would be easier to explain to your customers the differences between the 5 and the 4S, and all of your current devices would be able to use Siri.

UPDATE: I originally and mistakenly had the current iPhone 4S and future iPhone 5 storage capacity at 8, 16, 32GB, when in reality its currently at 16, 32, 64GB. I changed those numbers to the correct ones. A dumb mistake.

If anything, correcting that discrepancy better proves my point: inserting a 8GB iPhone 4S into the entry level could make more sense than preserving the 4.

I should also point out that this is a very U.S. centric view of the iPhone lineup. I didn’t take into account pay as you go phones overseas.

UPDATE 2: seanblog.tumblr.com draws up an alternate scenario that could also work:

• (free) iPhone 4, black, 8GB, CDMA
• (free) iPhone 4, black, 8GB, GSM

• ($99) iPhone 4S, black, 8GB
• ($99) iPhone 4S, white, 8GB

• ($199) iPhone 5, black, 16GB
• ($199) iPhone 5, white, 16GB

• ($299) iPhone 5, black, 32GB
• ($299) iPhone 5, white, 32GB

• ($399) iPhone 5, black, 64GB
• ($399) iPhone 5, white, 64GB

This way also reduces SKUs, but not complexity. On the “free” iPhones, color is not the complexity you want to reduce. Different colors are easy. It’s the different antennas that are harder. The GSM and CDMA versions are different enough to be considered two different pieces of hardware.

If you want to simplify my proposed lineup even further, use seanblog’s idea to drop the white color from the “free” tier to take it down from 10 SKUs to 9 SKUs.

UPDATE 3: Daring Fireball responds. I respond back.