Apple to Target Emerging Markets with Low-Cost Phone to Launch in September at $199?

mrsir2009 said:

Good luck If Apple does sell a cheap iPhone, I doubt they'll let people in first world countries get their hands on it.

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On the contrary! I think Apple might be targeting exactly their well established markets, where there's a lot of people who still desire an iPhone but do not want to sign contracts for it (think teenagers who grew with iPods for example). With this, Apple might be able to further spread in these places, countering the flood of cheaper, crappy low-end devices from other companies while still making a good amount of money from it.

Then again, I've heard that $199 story before about the iPad Mini, and then everyone was surprised to see a $329 base price. This is simply explained by the fact that Apple doesn't consider its competitors's prices when pricing new products, only its own.

I believe the same thing will happen if Apple is indeed to launch a cheaper iPhone. It'll probably be similar to what the iPad Mini is to the low end iPad - a full fledged device with a price good enough when compared with the other options in Apple's portfolio, but still much too higher than the rest of the market. I'd bet on a price around $350~$400 - way more expensive than the cheaper phones market level at $200 but some good $150~$200 lower than the current entry level iPhone at ~$550.

Where did this go school to figure out math like that?

i wonder if this will play out like international ed books where people from the us are going online to buy them and saving a ton.

tdtran1025 said:

Where did this go school to figure out math like that?

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Where did this go school to figure out english like that?

JaySoul said:

Apple to Apple Apple iPhone Apple Apple in Apple Random Month Random Price?

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I tried clicking on this but you forgot to set it up as a link to what is undoubtably a real attention getting article.

Cheap iPhone already exists

What't the point of designing and manufacturing an entirely new product if cheap iPhones (4&4S) already exist?! How would the cheap new cheap iPhone differ from the last generation iPhones that are available now?
I see no point in doing it.

He has made a guess at a price he thinks Apple could sell a lot of phones at, but without considering if Apple could make a phone at that price.

He also say that it will succeed on volume rather than profit margin. That is not Apple's way.

This is the least believable story on the front page I have seen. It has no basis at all.

dont buy it

then again its apple


they sell like crazy so why go and fight for more with the likes of samsung

emjeycgn said:

What't the point of designing and manufacturing an entirely new product if cheap iPhones (4&4S) already exist?! How would the cheap new cheap iPhone differ from the last generation iPhones that are available now?
I see no point in doing it.

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It would be cheaper... The Iphone 4S isn’t even that much cheaper than the current iPhone - Only $100-$200 less.

Benedict Evans has a great post why a cheap iPhone is unlikely.

Even if they would accept a very low margin (which would lead to analysts trashing Apple again and their stock plummeting again) of 30% and would grab 50 million device sales per year (and rising), that would only add about 20% to their profit.

And may even cannibalize sales of regular iPhones (especially the cheaper ones).

And even with a 200$ iPhone - they still won't be able to grab the 100$ Android market.

SILen(e said:

Benedict Evans has a great post why a cheap iPhone is unlikely.

Even if they would accept a very low margin (which would lead to analysts trashing Apple again and their stock plummeting again) of 30% and would grab 50 million device sales per year (and rising), that would only add about 20% to their profit.

And may even cannibalize sales of regular iPhones (especially the cheaper ones).

And even with a 200$ iPhone - they still won't be able to grab the 100$ Android market.

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Do it as eSIM so it only works in Emerging markets.
For now...

eSIM and VoIP so they only need 3G data radio which could all be embedded in an Aseries chip variant. About the only way they could make a decent simple iPhone based on iPodTouch(4thGen) which already sells for US$199

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.

maybe

My wife still uses her 3GS. I suspect that they could redo the 3GS with a few internal upgrades at a better price point. This would not be a Crappy design since it was the original design. At this point I suspect that a slightly upgraded 3GS would still outperform most of the cheap smartphones sold around the world. And it could do it at competitive pricing. So it is possible. What would be more difficult is squeezing out a 40% profit margin and be competitive. So the real question is not about can they or even crappy design in my mind, it's about whether they are willing to move to a slimmer profit margin for the low end phones. And yes there might be a bit of cannibalizing. But my wife is one that is looking for cheap while I am looking for best, so I would not buy the low end phone from apple, I will always buy the high end. And I doubt I am alone.

emjeycgn said:

What't the point of designing and manufacturing an entirely new product if cheap iPhones (4&4S) already exist?! How would the cheap new cheap iPhone differ from the last generation iPhones that are available now?
I see no point in doing it.

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This is my thinking also. I have no problem with Apple selling an iPhone mini, but it seems to me it already exists as the iPhone 4/4S.

I don't think Apple has any interest in selling a $199 phone just to get market share.

Could be good as a temporary replacement if your Iphone 4 or 5 is broken or lost. When the contract is up, upgrade back to the regular phone.

Idiots like gene Munster tanks the share price

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Bubba Satori said:

Where did this go school to figure out english like that?

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Wahahahaha...

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.

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.

I don't think Apple will introduce a $199 iPhone. But I think Apple could radically change the rules. Here's how.

1. Use a non-IPS 4.0 inch screen (a compromise between the 4th and 5th generation iPod touch);
2. Use the iPhone 4S's CPU;
3. Equip with 8GB of flash memory;
4. Enclose in a new slim case with metal back;
5. Run full iOS (just like the iPod touch);
6. Leave out the GSM/3G/LTE section;
7. Price at $199 and call it the iPod Flex or iPod touch (6th gen).

Yes, that's correct. Leave out the 3G/GSM/LTE section. However....

8. Offer a new $139 Bluetooth 4.0 wristwatch which includes the GSM/3G/LTE section with a nano-SIM slot. The watch "just works" when near your iPod Flex, iPhone, iPad, and/or Mac. There would also be a $179 version with 8GB of flash instead of 4GB.
9. The "iWatch" (or "iPhone nano") would also have an iPod nano-like screen and iPod functions. It could work on its own if desired. While there'd be a screen-optimized touch keyboard to use in a pinch, Siri (assisted by your "base" unit perhaps) would be preferred.
10. The iWatch/iPhone nano could be worn alternatively as a pendant if desired. (Straps and chains would be accessories, actually.) Or kept in a pocket, like a pocket watch.
11. Don't include third party application support initially, but tell the public you'll get to it. Do include Safari Nano (if possible). Use the same number of pixels as the iPhone 3GS (i.e. 480x320) but in a smaller screen size. The identical resolution but smaller screen (higher pixel density) will make it easier for application developers in the future if they want to support the iPhone nano. (It'd probably be about a 2.5 inch screen, give or take.)
12. Include remote control function for Apple TV.
13. Probably discontinue all existing iPods.

In other words, Apple should tell Samsung they're full of crap. Nobody ought to hold a boat next to their ear. (I've seen it too many times.) Change the game, and go small. Make a sub-$200 device that existing Apple owners would buy on impulse as an addition to their Apple product portfolio, not as a replacement. And thereby cater to the needs of individuals who are not currently Apple customers who could enjoy the iWatch/iPhone nano all by itself.

Note that the iWatch/iPhone nano would probably not have WiFi -- it sucks too much power -- and it might not even have LTE since it's not a data-intensive device. But Apple could add Bluetooth to its AirPort and Time Capsule devices (in addition to letting the iPod touch/iPhone/iPad/Mac/Apple TV act as Bluetooth gateways). More synergies there.

Partner with some carriers to offer $10/month data plans.

emjeycgn said:

What't the point of designing and manufacturing an entirely new product if cheap iPhones (4&4S) already exist?! How would the cheap new cheap iPhone differ from the last generation iPhones that are available now?
I see no point in doing it.

Click to expand...

The iPhone 4 and 4S are actually $450 and $550.

Don't get wrapped up in the on-contract pricing...

jrswizzle said:

Apple has shown a liking to the "gate-way drug" concept. A cheaper iPhone could open up a HUGE portion of the world to Apple's eco-system. Other Apple products, the app store, iTunes.....

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Who's to say a person who can only afford a cheap $200 iPhone now will ever be able to afford a $600 iPhone later?

Guess what... that $600 iPhone will still be there when they can finally afford it. No need for Apple to wreck their margins while someone works to get a better job!

I totally understand your ecosystem comment... but I seriously doubt the people who are buying cheap $80 Android phones are getting sucked into the Android ecosystem. Some developing nations don't even have the Google Play store.

But there's a good chance they already have an iPod and iTunes account. They're halfway there!

Munster predicts based on their view of the industry and their opinion on where Apple should be price wise to expand market share.

Fortunately for Apple, they don't listen to Munster.

Not a chance there will be a $199 undubsidized iPhone. Ever.

BBCWatcher said:

I don't think Apple will introduce a $199 iPhone. But I think Apple could radically change the rules. Here's how.

1. Use a non-IPS 4.0 inch screen (a compromise between the 4th and 5th generation iPod touch);
2. Use the iPhone 4S's CPU;
3. Equip with 8GB of flash memory;
4. Enclose in a new slim case with metal back;
5. Run full iOS (just like the iPod touch);
6. Leave out the GSM/3G/LTE section;
7. Price at $199 and call it the iPod Flex or iPod touch (6th gen).

Yes, that's correct. Leave out the 3G/GSM/LTE section. However....

8. Offer a new $139 Bluetooth 4.0 wristwatch which includes the GSM/3G/LTE section with a nano-SIM slot. The watch "just works" when near your iPod Flex, iPhone, iPad, and/or Mac. There would also be a $179 version with 8GB of flash instead of 4GB.
9. The "iWatch" (or "iPhone nano") would also have an iPod nano-like screen and iPod functions. It could work on its own if desired. While there'd be a screen-optimized touch keyboard to use in a pinch, Siri (assisted by your "base" unit perhaps) would be preferred.
10. The iWatch/iPhone nano could be worn alternatively as a pendant if desired. (Straps and chains would be accessories, actually.) Or kept in a pocket, like a pocket watch.
11. Don't include third party application support initially, but tell the public you'll get to it. Do include Safari Nano (if possible). Use the same number of pixels as the iPhone 3GS (i.e. 480x320) but in a smaller screen size. The identical resolution but smaller screen (higher pixel density) will make it easier for application developers in the future if they want to support the iPhone nano. (It'd probably be about a 2.5 inch screen, give or take.)
12. Include remote control function for Apple TV.
13. Probably discontinue all existing iPods.

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1-7:
You just described the iPod Touch 5th Gen.
The only difference is, that the 5th Gen iPod Touch has exactly the same display as the iPhone 5 - and i can't see why Apple would use a cheaper/worse display in the future, because with the 5th Gen, they probably used the same display for price reasons and because they think people deserve better quality displays.

8. The watch ist the worst possible place to have the 3G/4G module, because there's less room for the necessary battery.
Hell, even the nano SIM slot itself wouldn't fit and leave enough room for the really necessary stuff.
So if there's a base station somewhere on your body, it will be the device you put in your pocket, not the device on your wrist.
Or even a third device, which would only have the 3G/4G module and acts as an access point for both the iPhone (which would effectively become an iPod Touch by then) and the iWatch.

9. Siri yes, keyboard not really

10. Wearing it as a pendant would make it a pain in the ... to use, dangling around.

11. Using the same resolution would be absolutely unnecessary, because at 2 or 2.5" you wouldn't be able to use the device like you use a regular iPhone.

People are buying 5.x inch smartphones because their eyes are so bad that they need huuuge font sizes.

Using a 6pt font or even smaller to display stuff on the iWatch would make it unusable.

12. Sure, why not - but maybe unnecessary, who knows how Siri or whatever is used to control the Apple TV will work.

13. Sure, people would love to be forced to pay 150+ dollars instead of 49$ for an iPod.

Michael Scrip said:

Who's to say a person who can only afford a cheap $200 iPhone now will ever be able to afford a $600 iPhone later?

Guess what... that $600 iPhone will still be there when they can finally afford it. No need for Apple to wreck their margins while someone works to get a better job!

I totally understand your ecosystem comment... but I seriously doubt the people who are buying cheap $80 Android phones are getting sucked into the Android ecosystem. Some developing nations don't even have the Google Play store.

But there's a good chance they already have an iPod and iTunes account. They're halfway there!

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I think its safe to say theres a large difference between Apple's ecosystem and Google's. And this past year, Apple opened up their app/iTunes stores to hundreds of new countries.....

I know it hasn't necessarily been Apple's way in the past (I never saw the cheaper iPhone being $199 off contract....more like $299 - then free on contract) - but given the sheer volume of customers who would fall into this grouping (those who purchase cheaper smartphones) could be too large for Apple to ignore....

If they essentially create a plastic/cheaper build iPhone 4S, with only 3G and 8 GB of memory....the margins could still be pretty good. And as you said - many people already have iTunes accounts - this would give them a cheap excuse to buy more on those stores....

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Breaking Good said:

This is my thinking also. I have no problem with Apple selling an iPhone mini, but it seems to me it already exists as the iPhone 4/4S.

I don't think Apple has any interest in selling a $199 phone just to get market share.

Click to expand...

Market share isn't the goal - the sheer volume of potential customers would offset the lower margins and cause an iPhone "mini" to be hugely profitable.

I guarantee Apple's already done its homework.....they know if the lower margins would be worth it in the long run and there are likely various prototypes of cheaper build iPhones at Cupertino.....

I for one would love one simply as a backup - I generally like to sell my phones to offset the cost of the new one so if something happens to my current iPhone, I either have to buy a brand new one (if lost of stolen) or pay the $250+ fee for a refurb.....or at the minimum pay $150 for AppleCare +......could be worth shelling out the $200 once for a backup iPhone I always have handy - that way I can continue to sell my old one for the new one.

@jrswizzle

People who don't have money for a normal iPhone usually also don't have money for apps.

That's the main reason why the Android marketshare means nothing, because those who have 100$-Android devices don't use those devices as smartphones, they use them as dumbphones or feature phones.

How likely is it that someone who buys an iPhone for 200$ will then buy apps for 100$ in the lifetime of his iPhone (making Apple an additional 30$)?

And you should remember that even now, Apple has only earned 2.4 billion dollars from the app store - from 2008 to february 2013!

Sure, that's a lot of money - but not if you're making this amount in 2-3 weeks by selling iPhones, iPads and Macs.