Will Apple soon start making a cheap iPhone? That's what one analyst reckons, and the reasons do seem to add up.
Piper Jaffray's Gene Munster -- not of those ones, sadly -- thinks that at some point in the next two years, Apple will make a special version of the iPhone that'll cost just $200 (£125), Business Insider reports. He says the budget blower will be aimed at emerging markets such as India and China.
According to Munster, the traditional business model for mobiles (where the handset is subsidised by the networks) doesn't work in those countries. And that's where the next 3 billion smart phone customers are, so obviously Apple will want their business.
A couple of networks in China have already announced that they'll be offering the iPhone 5 imminently. Though the country's biggest network, China Mobile, which has almost 700 million subscribers, won't be taking the handset.
Indeed, Android mobiles dominate in China at the moment, and not just because they're cheaper. Fifty nine per cent of high-end handsets sold in that country in the last three months were Android. There were 3.5 million Android mobiles sold there in the same period, compared to 2.3 million iPhones.
But would Apple produce a special, low-cost iPhone? At the moment, whenever it introduces a new phone (or iPad, for that matter), it still offers the old one, but at a slightly more wallet-friendly price tag. Making a whole other device would seem an uncharacteristic waste of resources, but then it did introduce a smaller tablet, which it previously said it would never do.
It would also help to head off competition from Google and its cheap as chips Nexus 4. Or whatever the equivalent is in 2014.
What do you think? Would you buy a cheaper iPhone? Let me know in the comments, or on Facebook.
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Comments 19
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anonymous 24 November, 2012 14:01
Apple already make a cheap 'phone - they just charge a lot of money for it.
Matt Winston. 24 November, 2012 14:48
It's really down to if the new iPhone can offer something new,and I haven't seen anything new in a iPhone over the past few years except Siri, which is far from perfect. Thinner, lighter, smoother, taller, slightly faster are all things peoples expect from most phones, but what can the iPhone 5 do that the iPhone 4S and the Samsung Galaxy S2 can't do?
anonymous 24 November, 2012 14:56
The whole phone subsidies thing doesn't work in emerging markets and especially china because the airtime providers simply wont pay it. The same in India and most South American countries which is why Android is cleaning up. In fact, the subsidies issue is also affecting Apple right now in the US as T-Mobile have made it very clear they will not be taking on the iphone 5. And who can blame them? When the likes of Sprint have to commit to a $15billion undertaking over a four year period with Apple, it becomes unaffordable, especially as it takes a minimum of 2 years before they are making any money themselves. Add the now standard 24 month contract into the equation and then it becomes even more risky for them. There are no guarantees that they will retain any customer beyond their 24 month contract, so the reality is that airtime providers can very easily lose money and this is a ticking time bomb that is going to explode within the next 2 years, and the one company that is going to be seriously affected by it is Apple because the vast majority of their phones are sold this way. In effect, they get paid upfront, but the airtime provider takes all the risks. Can you see that business model lasting for much longer?
Now if Apple do make a cheaper cost phone, then by definition, their margins will retreat very significantly which will kill their share price, stone dead. The very fact that 75% of the global market share belongs to Android, tells you that people just want a smartphone. They are not buying into the whole Apple iOS thing because they do not perceive it as being a premium OS. Its the same with hardware. Hardware costs are falling in the same way that PC hardware costs fell, so Apple's high price and margin business model is already falling by the wayside and will, over the next 18 months, will become unsustainable. There are now so many people who are saying that the iphone 5 simply isn't worth the money and that it is no longer a premium product, so it is very obvious that their sales will fall off as indeed they are already.
And what type of product cane they offer, another ipad mini? The product is cheaper because they have cuts corners, i.e. the display and no matter what Apple fanbois tell you, the display on the ipad mini is very poor, so how and where are Apple able to cut corners to produce a cheaper iphone? Exactly, you've got it, the display, so if they do make substantially cheaper iphones, it will either have to be a continued version of the 4S, or an iphone with a non-retina display. Also remember that smartphone screen sizes are climbing about Apple's 4 inch screen size, so they will have togo to 5 inches to compete and a 5 inch iphone with a non-retina display is not going to be very good. It is going to take a year or more, but Apple's current business model will have to chance otherwise they will not be able to compete and when that happens, watch their share price fall.
anonymous 24 November, 2012 17:32
I might be missing something here, but if subsidised phone are a rarity in china, and most people are looking for a smartphone, why would Apple have to change their marketing strategy? Everybody knows that if you want a decent smartphone that won't get annoying you have to look at the premium handsets (htc One X, Galaxy S3, Lumia), and all of these are around £50-70 off the price of the iPhone. And if 59% of those handsets sold in china were high end android phones, who's to say there isn't enough of a market for the iPhone there? Obviously everybody would prefer to pay less for things, but Apple have always been a company which strives to be the best in what they do, and making a high standard, budget smartphone just isn't achievable with the value high end tech holds at this time.
anonymous 24 November, 2012 18:00
@anonymous 14:01 I love your comment because it's factual
anonymous 24 November, 2012 18:04
@ anon 14:56 But orange own t-mobile? Well EE as the overall company is called do sell the iPhone 5?
anonymous 24 November, 2012 19:51
Apple has an extremely successful business model. Why anyone expects them to change it to somehow "better compete" a beyond me. They will continue to do what has been successful and they will continue to ignore all the pundits who think they know better than Apple how to maximize profits.
Next year's "cheap iphone" is the 4S. In 2014 it will be the iPhone 5.
anonymous 24 November, 2012 19:56
anonymous 24 November, 2012 17:32 - yes you are missing something. Whilst top end phones in china may be close to the iphone 5 in price, most phones sold in china are mid range phones which are a good few hundred $ less than the iphone 5. In addition, Apple charge money up front, whereas other phone providers only charge as a phone is sold, so no upfront fees except when its switched on. As to Apple doing the best that they can do, how do explain the Maps App issue, the scratches on the iphones ( both from the factory and within a few days of purchase ). How do you explain the mediocre spec, etc, etc, etc? You may wish to believe that Apple is the best, but the reality, especially with the iphone5, is very different. And of course, seeing as 85% of the global market seem to agree with that, as Apple only has a 15% market share which is falling, it seems your view is not a common one.
anonymous 24 November, 2012 20:11
@anonymous 24 November, 2012 19:51 - No, Apple HAD a very good business model, but not anymore. They have lost market share and despite what people will tell you, the future is all about market share. They will have to lower their prices to continue with their current levels of product sales within 18 months but by then, the competitors will have dramatically increased their market share. Also, in emerging markets, most people buy their phones outright because they are unable to get phone contracts, so people will by low priced phones which they can sell on to someone else to buy a slightly more expensive one. Apple are unable to compete in that market because they seriously over price their products and you are going to find that 2013 is going to see decreased sales volumes for Apple as we have seen in the last few quarters of this year. You can believe the hype about people putting off buying an Apple product because of an imminent new version release if you want, but the facts state that yes people do wait, but as soon as they have seen what Apple have produced, they have purchased competitor products, so their business model will have to change and lower margin are going to be the order of the day.
anonymous 24 November, 2012 20:15
anonymous 24 November, 2012 18:04
@ anon 14:56 But orange own t-mobile? Well EE as the overall company is called do sell the iPhone 5?
Yes they do, however, T mobile have stated in the press earlier this week that the subsidy issue is the reason why they are not providing the iphone 5 on contract in the US. Looking it up
yourself.
??????? ????????? 25 November, 2012 14:48
Is it correct about not supporting iPhones by China Mobile? I've heard that Apple and China Mobile would start sales of iPhone in early 2013.
anonymous 25 November, 2012 22:38
Why not they have in less than a year given up on everything else they said they would not do. Larger iPhone smaller iPad and in general creating lower quality software and hardware.. so why not go all the way and make something cheap.. god knows they charge to much for all other products they make.
anonymous 26 November, 2012 02:20
I don't think the iphone is expensive, but then again I've got plenty of money.
anonymous 26 November, 2012 08:46
You do realise that iPhone sales were up 58% in the 3rd quarter this year compared with the same reporting period last year.
As their market share is reducing as more competition increases, that gives some idea in the total growth in the smartphone market.
Apple are still siting pretty happy at the top end of the smartphone market, but they missed out by not competing in the mid-priced arena when they had a chance. The mid-priced and budget market is where Android has gained most of it's traction and the bulk of their sales.
Apple were happy to concede that space as their strategy has been to concentrate on the "high-end" where the big profits are and this strategy has been an undeniable success; but that Android dominance in those cheaper markets has become the platform for an assault on the "high-end", which is the real competition to Apple.
The only way to counter that is to take their platform into the mid-priced market and capture all those people who want an iPhone, but can't afford one.
anonymous 26 November, 2012 08:47
Yeah and apple are poo cause people like it and they force me to buy their product and they make inferior products buy just using parts designed for purpose rather than sticking stock components together and making it out of plastic. Which all makes one of the brands rubbish. Glad I got to air my view. Zzzzzzzz
anonymous 26 November, 2012 08:48
@ Anonymous 2:20.
Good for you, while the rest of will have to decide weather to splash out on an overpriced handset or new clothing for the kids...
In the mean time you may want to start wearing a hat because that large phallus on top of your head may offend.
anonymous 26 November, 2012 09:22
If its a toss up between what you consider to be an expensive handset or clothes for the kids then perhaps you have your priorities wrong and shouldn't have had kids.
Just saying......
anonymous 26 November, 2012 09:51
anonymous 24 November, 2012 14:56 Had a fairly reasoned assessment of the phone market.
Whether he/she is right or wrong is one matter; however they're credibility is blown right out of the water with the statement " ...the display on the ipad mini is very poor...".
Crearly this is not only innacurate, but a pure case of trolling.
The iPad mini display is not "very poor" by any stretch of the imagination. It may not have the ultimate sharpness of screens with a higher resolution, but the quality of the images displayed are very good, if not the best at this size and it should be pointed out that it beats the much touted favourite small Android device by some margin.
anonymous 27 November, 2012 04:44
The discovery of iphones has brought a great revolution in the world of mobile technology. Since the launch of iphone 5, the buzz was about, when apple will announce its new range of iphones with a comparatively low cost. Here is the end of the anticipation.
iphone 5