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Old Feb 20, 2013, 09:08 AM   #1
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Apple to Target Emerging Markets with Low-Cost Phone to Launch in September at $199?




Piper Jaffray analyst Gene Munster late yesterday issued a new research note using average low-end smartphone pricing in emerging markets to argue that Apple's rumored lower-cost iPhone will launch in September with a price tag of around $199 unlocked.

Munster examined smartphone pricing on 15 different models across six international markets (Germany, UK, France, China, Brazil and India) to find that lower-end smartphones average slightly over $200 unsubsidized. In China and India, the average prices are $138 and $140 respectively, while Apple's cheapest existing phone, the iPhone 4, averages over $500.
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We believe the last finding demonstrates that the biggest pricing gap for iPhone exists between the cheapest iPhone and the average low-end smartphone. This low- end segment is important given we estimate it is a $135B market in 2013 that Apple is currently not participating in (60% of smartphones, or 540m units at a $250 ASP).
Munster predicts Apple will announce its low-cost handset in September, and estimates that a $199 price tag would generate sales of 37 million phones in the rest of 2013, 96 million in 2014 and 170 million in 2015. While an iPhone at that price would carry much lower profit margins for Apple, Munster believes that the opportunity is so significant given the size of the potential market that Apple will be willing to focus on gross profit through volume rather than margins.

While rumors of a lower-cost iPhone have been picking up steam in recent months, a price point as low as $199 would seem to be overly aggressive for the company given its refusal to sacrifice quality to achieve a low price. Tim Cook noted at last week's Goldman Sachs conference that "the only thing [Apple] will never do is make a crappy product", and it remains difficult to see how Apple could provide the iPhone experience at such pricing.

Article Link: Apple to Target Emerging Markets with Low-Cost Phone to Launch in September at $199?
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Old Feb 20, 2013, 09:10 AM   #2
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Doubt it.
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Old Feb 20, 2013, 11:48 PM   #3
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Last night, Gene Munster came to me in a dream. He told me that Apple plans to license the iOS platform. In hopes of growing its market share.

My dreams usually are not that vivid. Except for the unicorn ones.
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Old Feb 20, 2013, 09:10 AM   #4
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Why does MacRumors keep reporting Wall Street analyst predictions as rumors? What inside information does Gene Munster have exactly?
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Old Feb 20, 2013, 09:16 AM   #5
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Apple to Apple Apple iPhone Apple Apple in Apple Random Month Random Price?
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Old Feb 20, 2013, 11:28 AM   #6
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This rumor again?
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Old Feb 20, 2013, 11:46 AM   #7
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That would be my play…

Make the "iWatch" or "wearable" a small, mostly "screenless" and all about making calls device…differentiating it from the iPhone, and therefore not diluting the handset market with a "cheap" phone. Perfect second accessory to those that already have an iPhone, and simpler interface draws in new tiers of customers.

Not sure how you make a phone call on a watch - show us Apple!
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Old Feb 20, 2013, 02:53 PM   #8
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Quote:
Originally Posted by JaySoul View Post
Apple to Apple Apple iPhone Apple Apple in Apple Random Month Random Price?
I tried clicking on this but you forgot to set it up as a link to what is undoubtably a real attention getting article.
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Old Feb 20, 2013, 09:17 AM   #9
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They're making the false assumption that Apple is looking to make money. They've shown time and time again that they don't care to make cheap products.

They've never sold a new laptop for under $899, they've never sold a new desktop for under $499, they've never sold a new tablet for under $299, so why would they enter the cheap phone market?

Yes, they might offer a phone cheaper than the iPhone 4 currently is... maybe they'll keep the iPhone 4 around and sell it for $299 - $399 (total cost of ownership), but I don't see them dropping to $199.

Keeping the iPhone 4 around really wouldn't be bad... They'll likely be keeping the 4S around and from a developers perspective, there's not much special you have to do to support the 4, unless you're making a very intensive game or simulation or something.
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Old Feb 20, 2013, 09:17 AM   #10
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Uuummmm I truly believe they won't do that.
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Old Feb 20, 2013, 09:20 AM   #11
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I'm living in Mauritania (Africa) at the moment and there are tons of Samesung shops. Many of which are pretty ridiculous looking but nevertheless, they exist.

I've been meaning to take pictures and post them because some of them are hard to even imagine...

Even if Apple makes a low cost phone, they will need to vastly open up who can sell it if they wish to compete in a place like this.
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Old Feb 20, 2013, 09:20 AM   #12
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Maybe it will be the iWatch, and be mostly controlled by Siri.
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Old Feb 20, 2013, 09:26 AM   #13
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I can see the MacRumors headline now.
Apple's Low Cost iPhone Cannabalizing Flagship iPhone Sales

Can't they see that while they compete in a market selling cheap iPhones they will also hurt their margins and sales of their flagship iPhone? This is why I can't see Apple doing this. I think the fact that selling their previous generation iPhone as a "low cost" option has been working well is more than enough reason to dispute this rumor all together.

Now watch me eat my words in a year..

*Edit*
My above post is more for the subsidized market in the US while this article is for unsubsidized market pricing in all markets.

Still, a cheaper unsubsidized iPhone would cannibalize iPhone sales all together unless there was a main difference. I can't see that difference being iOS features or functionality. The difference would have to be quality of materials which goes against Apple's principles.

Remember what Steve said to Nike? Get rid of the crap. I hope Apple doesn't start adding "crap".
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Old Feb 20, 2013, 10:34 AM   #14
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Well seeing analysts thought the iPad Mini would be priced between $249-299 in order to compete against other low-cost tablets and Apple ended up going on top with $329 to sprinkle a little bit extra profit margin, I expect the same thing to happen here. If the average unsubsidized smartphone around the world costs around $199, then if/when Apple comes up with a low-cost iPhone, it'll probably start at $249 probably for the 8GB version with a $349 16 GB version. Existing iPhone tiers are $450/$549/$649/$749/$849 so with $249/$349 Apple has a consistent product stack.
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Old Feb 20, 2013, 10:47 AM   #15
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Quote:
Originally Posted by street.cory View Post
*Edit*
My above post is more for the subsidized market in the US while this article is for unsubsidized market pricing in all markets.

Still, a cheaper unsubsidized iPhone would cannibalize iPhone sales all together unless there was a main difference. I can't see that difference being iOS features or functionality. The difference would have to be quality of materials which goes against Apple's principles.

Remember what Steve said to Nike? Get rid of the crap. I hope Apple doesn't start adding "crap".
I guess I see what you're saying, but I imagine they sell premium products to 1st world established markets and then sell a less expensive phone to emerging markets.

Companies have been doing this for a long time. We used to just not know about or care about it. I maintain this is probably a good idea.
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Old Feb 20, 2013, 10:55 AM   #16
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Emerging Markets? I bet there are a lot of people in established markets who would like a 199 iPhone.
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Old Feb 20, 2013, 11:11 AM   #17
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Quote:
Originally Posted by AustinIllini View Post
I guess I see what you're saying, but I imagine they sell premium products to 1st world established markets and then sell a less expensive phone to emerging markets.

Companies have been doing this for a long time. We used to just not know about or care about it. I maintain this is probably a good idea.
True. If they had it restricted to emerging markets where iPhone sales are close to non-existent I imagine it could be a hit and add to revenue, marketshare, and entice people to use the ever-addictive iTunes and App Store.

Where does Apple stand in the prepaid market? I know a few services allow unlocked iPhones on the network but are their iPhones included with the prepaid service?
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Old Feb 20, 2013, 10:24 AM   #18
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It boggles my mind that analysts (who were supposedly schooled) are so fixated on marketshare as if that's the only measure of success. They remind me of moths irresistibly drawn to a flame... They just can't help themselves.
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Old Feb 20, 2013, 12:07 PM   #19
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I don't see this happening. With the overwhelming majority of the profits and the #1 platform for mobile developers, what is there to gain?

They have basically the best of both worlds. More marketshare doesn't give them much really because its only on the largely unprofitable low end where they have less marketshare which this supposed $199 low end iPhone is supposed to target.

Developers already target iOS over other platforms with more marketshare because its a more desirable target market... the users have more money, they browse the web and use apps more, and developers make more money.

Apple seems to be exactly where they want to be and that is making the best phones and the most money doing it. The only people who care about general "marketshare" are analysts and fanboys.
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Old Feb 20, 2013, 04:43 PM   #20
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dont buy it

then again its apple


they sell like crazy so why go and fight for more with the likes of samsung
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Old Feb 20, 2013, 06:51 PM   #21
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I don't see how this analyst can read it as $200 from this graph. It looks to me like a $400 iPhone, but I`m not an analyst. At least wasn't until now.
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Old Feb 21, 2013, 02:13 AM   #22
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I'd buy it, as long as I could use it without a data contract (not sure if Verizon forces you to get one if you buy your phone elsewhere). I'd be happy to pay for chunks of data instead. Given that I'm a homebody and otherwise almost always near WiFi, a little would go a very long way.

The other reason I'd like this is just that I'd like a new phone and it's hard to find a reasonably priced one without a data plan. I'm a dumb phone user and have had an LG Dare for about 3 or 4 years. I'd like to upgrade, but the dumb phones out there now are more expensive than they used to be, even on contract, and I have no interest in renewing my contract with Verizon for two years just so they can give me $50 an already overpriced dumb phone. In fact an iPhone at 199 is about the same price as what Verizon is selling some dumb phones for on contract right now and far less than a lot of their dumb phones cost off contract.

I've gone so far as to look at all the old standbys (Nokia, Sony Ericsson, Motorola, Samsung) just to see if any have direct to consumer reasonably priced cell phones, and they don't. You have to buy used. If I were a business person, it's a market I'd go after! It seems like no one is making stylish, high quality dumb phones right now. I think back to some of the Nokias and Ericssons I used to have that were very high on style and built like workhorses with great sound quality. The thing about going after the dumb phone marke, is that it would be easy to capture since it seems like everyone has left it, but once you got customer loyalty you could start introducing increasingly complex phones until you start offering your own line of smartphones. To me it seems kind of crazy. To wit, after the iPod came out, you could still go out and buy a high-quality walkman at lower and lower prices, but the would-be analogous situation with phones has not played out.

I'd even buy a $150 off-contract dumbphone from Apple. I just want something with high-quality sound, contacts, and that isn't ugly.
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Old Feb 20, 2013, 11:01 AM   #23
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It will never happen. I don't know why analysts are expecting an "iPhone International" or some other random named phone that would essentially be a low quality iPhone 4. That would kill Apple's marketing image faster than almost anything I can imagine, outside of them live streaming animal sacrifices to please the spirit of Jobs.
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Old Feb 20, 2013, 11:05 AM   #24
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The opportunity to get more people sucked into the Apple eco-system will be too good for Apple to pass up.

Both the larger iPhone AND cheaper iPhone are happening! It'll be tempting not to buy both - just to check them out
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Old Feb 20, 2013, 11:05 AM   #25
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The hardware isn't the problem, it is the data / voice plans. I would pay $1,000 for an iPhone if it was a small $10 dollar a month bill to use it.
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