Insiders "now confident" Apple will launch lower-priced, lightweight iPhone as early as JuneAfter discovering several unreleased iPhone prototypes through its research back in December, analysts at the investment research firm Topeka Capital are raising their convictions this week that Apple is gearing up to introduce one of these models at a much lower price point around mid year.
"In late December, our research 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," analyst Brian White told clients in a research note Monday.
The analyst went on to say that he believes June would serve as the earliest point of entry for the device, which could be brought to market under names such as "iPhone mini" or "iPhone Air" given the prototypes' lighter weight due them being wrapped in plastic enclosures.
"We believe a $250 to $300 price point for a lower-priced iPhone would make sense and 58% below the $649 price point for an unlocked 16GB iPhone 5," White said. "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."
Even with a gross margin estimated at 10 to 15 percentage points lower than existing iPhone models, the analyst believes the device's expected $250-to-$300 price point will allow Apple to significantly expand its reach in the smartphone market and broaden inroads in China, while also opening up opportunities in other BRIC countries such as Brazil, Russia, and India, where growth potential stands at its highest.
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, 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.
As for how Apple plans to shave down the retail price of this so-called lower-cost iPhone, White believes the device will adopt a more cost affordable display, case, memory, wireless, camera and processor.
"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," he said.
On Topic: iPhone
- Apple's iPhone leads in JD Power satisfaction survey of US carrier customers
- Facebook updates iOS app with food & ticket purchases, new Recommendations system & more
- Apple Pay picks up 24 more US banks & credit unions plus British Airways bookings
- Researchers expect 74 million iPhone sales in Q4 2016 on strength of new releases
- Apple App Store compensation changes coming to South Africa, New Zealand