Originally Posted by jragosta
A case alone doth not an iPhone make.
The case is only a small fraction of the cost of making a phone - a couple dollars AT MOST. The cost is determined by all the other components. Furthermore, some plastic cases might cost more than some metal cases. So, yes, a phone with a high quality plastic case and top end components would cost more than a phone with a cheap, stamped metal case and low end components.
And, of course, the selling price is more dependent on the market positioning than the manufacturing cost, anyway. I've had several products where our high priced premium product was actually less expensive to produce than the low-end, generic product. There are lots of reasons why you might charge a premium price for a product that's cheap to make - or vice versa.
Although your point is valid otherwise, you're forgetting that the iPhone 4S has an extremely costly materials cost due to its use of an additional glass plating on the back, which is more expensive than the additional aluminum used on the iPhone 5. The cost of the processor and DRAM is actually quite negligible as well. Even when new last September, iSuppli estimated the A6 processor to only cost $17 to manufacture. The A5 in the 4S isn't dramatically cheaper because the die size is similar.
In any event, there's probably not a large difference in the marginal cost of manufacturing an iPhone 5C and a 4S. But, removing the 4S from the lineup confers some additional benefits to Apple if they choose to go that route. First, it simplifies their lineup of phone offerings to only 4" devices using the lightning connector. On the manufacturing end, this means fewer SKU's to hold in inventory. On the sales end, Apple might confuse customers by offering a plastic iPhone with better specs at a higher price point than a premium phone with specs one year older. Many, if not most, consumers who are passing on a $199 subsidized phone are doing so because they think the cheaper offerings have specs that are "good enough". Those customers would probably find the iPhone 4S much more appealing than the 5C even before considering that it's also cheaper.
If Apple does keep the 4S, it begs the question: why the hell did they make the 5C at all and risk their brand image by creating a "cheap" product? And then what does it say about the value of premium build quality when they price a plastic device above the 4S? Speaking as an Apple investor, I thought one of the primary purposes behind creating the 5C was to create an entry-level model that is both powerful enough to satisfy buyers by offering last year's premium specs, while also not being such a compelling competitor to the premium phone (5S) as to induce mass cannibalization.
I don't think this rumor is true -- the earlier one where the 5C replaces both the 5 & 4S is more believable.