updated 05:15 pm EST, Thu February 10, 2011
Apple may have cheap iPhone, soft SIM, dual mode
Apple has been developing a budget version of the iPhone that would help undercut Android, a leak Thursday afternoon maintained. The new version would be a third smaller and much less expensive, possibly as little as $200 off-contract. The design described to Bloomberg would use components from current iPhones to drop the price down.
The project has been in development since at least 2010 and isn't necessarily guaranteed to launch. Apple is known to be willing to cancel projects, even just before launch, if it doesn't believe they will succeed. If it reaches production, it would ship "near mid-year."
Despite talk to the contrary, Apple is also rumored to still be on track for developing a software-based SIM, known supposedly as a Universal SIM. Customers on GSM networks, such as AT&T or Bell, would have the option of switching carriers without having to swap SIM cards. A future iOS update would even let customers choose the carrier themselves.
The publication further supported notions of a dual-mode iPhone that could connect to either CDMA or GSM. A shift of the sort was entirely expected and was supported by the discovery of a Gobi chip in the Verizon iPhone that could have supported GSM if Apple had room for a SIM slot.
A low-priced phone might be difficult for Apple. The Verizon iPhone 4 does cost less, but its raw $171.35 parts price leaves very little room for Apple to drop the price without sacrificing major features. The 16GB of storage could be reduced to trim the price, but scaling back the display would affect what Apple could assume in resolution and interface for future iPhones. It may also be hesitant to drop the front camera or to fragment its OS with yet another resolution.
The cut could nonetheless get support from recent price drops. Just before the Verizon iPhone was made public, Apple dropped the iPhone 3GS to $49, albeit on contract. It might be counting on component price drops or to cut profit margins to get an iPhone 4 down to that kind of price on contract.
Although most of Apple's attention has been on competing against high-end Android phones like the Samsung Galaxy S line, it may see a $200 contract-free iPhone as a way of cutting into Android's rapidly growing share in southeast Asia and the developing world. Predominantly Chinese firms like Huawei and ZTE have been cutting into rivals' market share, especially Nokia, and in some cases have been putting pressure on even basic feature phones.
Even in the US, modest but reasonably high quality Android phones such as the LG Optimus V now cost $150 without a contract.