It has been widely speculated that Apple will unveil a cheaper iPhone to make inroads in the price sensitive emerging markets. According to some rumors, Apple could launch the cheaper iPhone this year.
Morgan Stanley analyst Katy Huberty told clients in a research note that the iPad mini could be coming as early as this year.
She believes that Apple could almost triple its market share in China from 10% to 30%, if the cheaper iPhone, unofficially dubbed iPhone mini is priced at $330.
Huberty wrote in a note to investors:
“We believe Apple could launch iPhone Mini at $330 (about Rmb 2,000), in-line with flagship products in China from Lenovo, Huawei, ZTE, and Coolpad. Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth), which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars.”
Currently, iPhone 4 is the cheapest iPhone, retailing for $450 without a contract, so a $330 iPhone would definitely widen the target audience. But she points out that Apple will have to strike a deal with China Mobile, China’s largest carrier. Apple currently sells the iPhone through China Unicom and China Telecom.
During last quarter’s earning call, Apple’s CEO Tim Cook had this to say when he was asked about the cheaper iPhone:
The most important thing to Apple is to make the best products in the world. We aren’t interested in revenue for revenue’s sake. We could put the Apple brand on a lot of things and sell a lot more stuff. We only want to make the best products. We’ve been able to build market share and have a great track record with iPod of doing different products at different price points. I wouldn’t view those as mutually exclusive as some might. We’re focused on making great products that enrich lives.
Several analysts are predicting a cheaper iPhone launch this year. Topeka Capital analyst Brian White believes that the less expensive iPhone would come with a plastic body instead of a metallic casing to reduce costs.