They have to if they want to stay in the game.
I don't see this being anything big besides possibly switching numbers around to look more modern. AT&T sells the 4 for 99 cents and the 4s for $100 everyday of the week, so they have their price points covered. My guess is that they'll just try to have a lineup of 5s, 5, and 5CE (crappy edition), just so people can all have a 5. They'll probably just stick 4s guts in a 5 shell and call it a day.
I don't know if they'll do this or if it makes sense.
They already make plenty of sales with lower price point phones in older models, so while a toned down "new" iPhone would have they already have the budget area for smartphones sort of covered
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