updated 10:39 am EST, Mon February 11, 2013
Apple allegedly testing different sizes
Late December research by his firm "uncovered iPhones in different screen sizes for potential launch in May/June, allowing Apple to better bifurcate the market and pave the way for a lower-priced iPhone," claims Topeka Capital Markets analyst Brian White. In a new memo he argues that June would be the actual earliest launch date for a cheap iPhone, and that Apple could use a name such as "iPhone mini" or "iPhone Air," since it's believed that the hardware will use a lightweight plastic enclosure.
"We believe a $250 to $300 price point for a lower-priced iPhone would make sense and [be] 58% below the $649 price point for an unlocked 16GB iPhone 5," White continues. "A $250-$300 price range would also be competitive with China-based Xiaomi that offers a high-end phone experience at a mid- range price of ~$320 in Chinas." He notes that even if the phone generated 10 to 15 points less profit margin than current iPhones, it would still let Apple reach untapped markets in Brazil, Russia, India, and China, where the pricetag of an iPhone is often out of reach.
"For example, we estimate that Apple was unable to address at least 60% of the smartphone market in 2012 (not to mention the feature phone market) due to the high price point of the iPhone," he says, "while we believe a high percentage of the annual smartphone unit growth of 688 million between 2012 and 2016 units (i.e., from 717.5 million to 1.4 billion) as estimated by IDC, will be outside of the high end market."
While nothing concrete has emerged on how Apple might scale back a cheap iPhone, White suggests several possibilities. Among these are a cheaper display, less storage, a slower processor, scaled-back wireless support, and/or a cheaper camera. Casing, though, is expected to be a focus. "The case would be an interesting area of cost savings with a lower priced material (e.g., plastic) versus the aluminum unibody casing on the iPhone 5, while adding colors to excite consumers," White comments.