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Apple would address 65% of smartphone market with low-cost iPhone

post #1 of 95
Thread Starter 
While Apple currently competes in the high-end smartphone market, a low-cost iPhone would allow the company to address the 65 percent of the market it does not currently serve.

Gene Munster of Piper Jaffray believes a cheaper iPhone would allow Apple to sell handsets to a market that represents 580 million potential customers.

"We believe that the high-end smartphone market (above $400 USD off contract) for [calendar year 2013] will be about 320 million units, of which we believe Apple will capture 50% market share," Munster said in a note to investors on Thursday.

"We believe this means Apple is missing the other 65% of the market, or 580 million units, given its current product lineup without the lower priced phone."

iPhones


He also isn't concerned about the prospect of reduced margins with a cheaper iPhone, expecting the total impact to be less than 1 percent over the next few years.

"We believe the opportunity for Apple is too large to miss, as the low end market is growing significantly faster than the high end smartphone market," he said.

Munster previously said on Wednesday that he sees a low-cost iPhone generating $6.5 billion in revenue for Apple, assuming the rumored device were to launch at the end of 2013. He expects the company to charge around $199 for a new unsubsidized iPhone geared for emerging markets like China.

Currently, Apple's cheapest iPhone without a contract is the iPhone 4, which sells for $450 in the U.S. But taxes bring that cost up to $490 in China and $750 in Brazil, two key countries where low-end, contract-free smartphones are big sellers.

This week, a flurry of reports, including one from The Wall Street Journal, claimed Apple is interested in reaching new customers with a less expensive iPhone. The moves by the company are said to be in response to the popularity of low-end devices, particularly those running Google's Android mobile operating system.

Rumors of a cheaper iPhone are not new, but analysts have continually predicted that Apple will build a cheaper handset. Many have cited Apple's approach with the iPod and iPad, both of which saw their product lineup grow with smaller and cheaper options.
post #2 of 95

Oh no ! Not again ! ..... too much is too much ....


Edited by umrk_lab - 1/10/13 at 8:32am
post #3 of 95
They may. They may not. I always thought an iPhone 3GS with updated guts (A4 and lightning mostly) would make a good "cheap" phone.
post #4 of 95

gm;dr
 

Hmmmmmm...
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Hmmmmmm...
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post #5 of 95

OMG, this again?  The iPhone 4, which runs rings around "free" phones, is $1 or less with a contract.

 

I think the tech media wags the dog with some of these stories.

post #6 of 95
Um, a free iPhone isn't low-cost enough?
post #7 of 95
I wouldn't say it will never happen but this analysis is BS. He's basically including feature phones in the "smartphone" category to get these numbers.

The "low end" of the smartphone market he talks about, are the far flung markets where no one want's to pay more than 50 bucks for their phone and the networks are so bad they couldn't get a decent data contract anyway.

What good does having an iPhone do you if the data network doesn't exist in your country or you have to pay triple what we pay to access it?

The whole idea that a "cheap" iPhone means everyone in Africa and India will go out and buy one is just ridiculous IMO. A feature phone would be a much better choice in terms of a "low end" device for those markets.
post #8 of 95

it's stated that they are talking about off-contract cheap phone... do note that these "free" iPhones still carry a monthly subscription fee... 

post #9 of 95
Quote:
Originally Posted by gordy View Post

OMG, this again?  The iPhone 4, which runs rings around "free" phones, is $1 or less with a contract.

I think the tech media wags the dog with some of these stories.

Quote:
Originally Posted by scotty321 View Post

Um, a free iPhone isn't low-cost enough?
Apparently you guys don't understand what free really means. The idea of a "cheap" Apple phone doesn't mean a phone that requires a $50 data plan over two years (costing you $1200). It means a handset you can use with a Rechargeable SIM card and no contract at a low handset price, which is how most not-so-rich people around the world actually use a cell phone.
post #10 of 95

No, they wouldn't. 

 

"Apple would address 500% of the tablet market with a 5" tablet."

 

See, I can lie, too.


Originally Posted by tonton View Post
Apparently you guys don't understand what free really means.
 

What we don't understand is why the up front cost matters when you still pay out the ear monthly regardless of how you get the phone. And yes, even on PAYG, with no data or anything else but voice*, you pay more than these third world countries can handle. So even if Apple makes a magical iPhone that is $200 off-contract with worthless build quality and utterly destroys their brand mindshare, they'd still whine that it's too expensive monthly. 

 

*See, here's the thing: APPLE MAKES A SMARTPHONE. If you want just voice, go buy something else. 

 

Of course, Apple will do this, since they're now in the market of just doing whatever the analysts say they "have" to do.

post #11 of 95
Is Gene Munster paying AI to put up stories quoting him? Why do we care what he says? 1hmm.gif
post #12 of 95
Quote:
Originally Posted by AppleInsider View Post

Munster previously said on Wednesday that he sees a low-cost iPhone generating $6.5 billion in revenue for Apple, assuming the rumored device were to launch at the end of 2013. He expects the company to charge around $199 for a new unsubsidized iPhone geared for emerging markets like China.

Currently, Apple's cheapest iPhone without a contract is the iPhone 4, which sells for $450 in the U.S. But taxes bring that cost up to $490 in China and $750 in Brazil, two key countries where low-end, contract-free smartphones are big sellers.

 

Quote:
Originally Posted by Gazoobee View Post

I wouldn't say it will never happen but this analysis is BS. He's basically including feature phones in the "smartphone" category to get these numbers.

The "low end" of the smartphone market he talks about, are the far flung markets where no one want's to pay more than 50 bucks for their phone and the networks are so bad they couldn't get a decent data contract anyway.

What good does having an iPhone do you if the data network doesn't exist in your country or you have to pay triple what we pay to access it?

The whole idea that a "cheap" iPhone means everyone in Africa and India will go out and buy one is just ridiculous IMO. A feature phone would be a much better choice in terms of a "low end" device for those markets.
 

 

i'd say that Southeast Asia and China as stated in the article has more people opting for the 50 bucks Android phones though that does not necessarily mean that telcos here are not having data plan... though most are on prepaid data plan as well.. and having these cheap iPhones will surely bring down Android dominance here in Asia..

post #13 of 95
Quote:
Originally Posted by scotty321 View Post

Um, a free iPhone isn't low-cost enough?


Low cost means a cheap unsubsidized phone without a contract and obligation to pay X amount per month. Usually prepaid users pay some cheap rate per minute (e.g 3c) or per MB and sometimes their money never expire even if the service is not used
post #14 of 95
With T-Mobile's apparent decision to only provide the iPhone without a contract, it means even the old iPhone4 would cost a couple hundred dollars. Gen(i)e only addresses China as a market for unsubsidized phones but I wonder if that's the direction most cellular suppliers will be going to in the future. They might take a gamble and think they could make more money by only providing a service (haha) instead of also paying for the phones. If this is the direction Apple has to compete in, getting a lower cost phone for everyone is something they will need to pursue. I discovered my brother actually bought an iPhone5 off-contract so he could use a smaller, local cellular provider. He usually is anal about total cost so it must have been a better deal to buy the iPhone outright than to get nickel-and-dimed for two years.
post #15 of 95
Originally Posted by rob53 View Post
With T-Mobile's apparent decision to only provide the iPhone without a contract, it means even the old iPhone4 would cost a couple hundred dollars.

 

And still be cheaper after two years than on a subscription. So I really don't get this "MUST BE CHEAP MUST BE CHEAP MUST BE CHEAP" stuff. 

 

It's a smartphone. Beyond that, it's a flagship smartphone.

post #16 of 95

The only low-cost iPhone you will ever see (if there will be one) will be iPhone 4 or 4S with updated connector.

post #17 of 95
Quote:
Originally Posted by Tallest Skil View Post


 

What we don't understand is why the up front cost matters when you still pay out the ear monthly regardless of how you get the phone. And yes, even on PAYG, with no data or anything else but voice*, you pay more than these third world countries can handle. So even if Apple makes a magical iPhone that is $200 off-contract with worthless build quality and utterly destroys their brand mindshare, they'd still whine that it's too expensive monthly. 

 

 

Virgin Mobile. $35 per month, unlimited text, voice, 4G.

post #18 of 95

And Again, the same analyst fires up the same rumor.

 

Ai, please stop megaphoning that rumor.

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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post #19 of 95
Quote:
Originally Posted by AppleInsider View Post

"We believe the opportunity for Apple is too large to miss, as the low end market is growing significantly faster than the high end smartphone market," [Munster] said.

 

Yes, I remember when they said the same about Netbooks.

post #20 of 95
Quote:
Originally Posted by gordy View Post

OMG, this again?  The iPhone 4, which runs rings around "free" phones, is $1 or less with a contract.

I think the tech media wags the dog with some of these stories.

Yes and no ... selling an old model cheaply is not quite the same as making a new up to date but perhaps less featured model. Having said that I don't have a clue what Apple could leave out as anything they did leave out would lessen the Apple experience. So color me skeptical on a cheap iPhone. I agree totally that the 4 is a cheap entry point but better yet so is a 4s which has virtually all 5's features except screen real estate and speed (I could be missing some things but I only have a 4s so not totally sure).
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post #21 of 95

And why does Apple need to capture these riff raff, broke customers again?

 

What's the upside? 

 

So a few more people with no money and probably not even a single credit card to their name can become an Apple customer? Who wants them or needs them?

 

Where's the profit for Apple here? 

post #22 of 95
Quote:
Originally Posted by anonymouse View Post

Yes, I remember when they said the same about Netbooks.

ROFL I do remember that!
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post #23 of 95

No. Just stop. Please.

 

Apple is not interested in the low-end of the market. Never has been. Never will be (hopefully).

 

Audi, BMW, and Mercedes are not interested in the low-end of the car market. And it would hurt their brands if they went after that market.

 

Apple releases well-built, high-quality products that people pay for. And are happy to do so because of the perceived and real extra value Apple provides.

 

- Jasen.

post #24 of 95
Low cost iPhones already exist. WTF is wrong with these a'holes? Even if somebody wants to go without a contract the secondary market is HUGE.
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post #25 of 95

This get's more and more embarrassing. What makes me angry, is that people like GM get paid for this BS talking.

post #26 of 95

A line of cheap phones will be released under the Performa line... iPhone P4 and iPhone P5.

 

To further accommodate marketing these phones Apple will be whoring out iOS to several vendors.

 

Apple CEO Tim Spindler also announced that there will be other changes to make Apple more competitive.
 

Hmmmmmm...
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Hmmmmmm...
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post #27 of 95
Originally Posted by lightknight View Post
Ai, please stop megaphoning that rumor.

 

I agree. It makes it look like we actually want this.


Originally Posted by gwmac View Post
If Apple can make a 32GB iPod touch for $299 and presumably make their profit margin, there is no reason why they couldn't make a cheaper iphone with maybe even less memory of around 8 or 16 GB and not make similar margins.
 

Yeah, they're not the same device by a long shot. If you want a comparison of what they "can and cannot do", compare equal generations of iPod touch and iPhone. That's the price difference. 

post #28 of 95
So there are three things that could happen

1) Apple continues selling the iPhone 4, after the 5S comes out, later this year for $349

2) Apple resurrects the 3GS as is for $249

3) Apple designs and creates an iPhone Mini from scratch and prices it anywhere from $300-500
post #29 of 95
I wish Gene would STFU. The more he bangs on about this the more the media narrative will be that Apple has to do this.
post #30 of 95
Quote:
Originally Posted by blackbook View Post

So there are three things that could happen

1) Apple continues selling the iPhone 4, after the 5S comes out, later this year for $349

2) Apple resurrects the 3GS as is for $249

3) Apple designs and creates an iPhone Mini from scratch and prices it anywhere from $300-500
But Businessweek claims this phone will be $99 or $149.
post #31 of 95

A cheap, plasticky, lower-quality iPhone?

 

That isn't something that is in Apple's DNA. At least I hope not. 

 

A lower-priced, slimmed-down version of a flagship product, like an "iPhone Mini" (taking after the iPad Mini) makes far more sense. 

 

But Apple slumming it with the bottom-feeders?  Nah.

post #32 of 95
Ah yes, the same crew that said Apple will never launch an ipad mini or a larger screen iphone are at it again.

They may or may not do this, but the wisdom in it would be to be to capture the low cost market from Android further expanding the iOS reach. The more iOS vs Android you have the less attractive it is for developers to develop for the fractured Android marketplace. You also develop an expanded loyal following.
post #33 of 95
If Apple introduces a low cost line of food products (perhaps rice and corn), they could address 99% of the eating market - which is larger than the phone market.

But that wouldn't make any more sense than getting into the cheap crapware phone market.
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post #34 of 95
Originally Posted by gwmac View Post
It can easily be done if they chose to do it.

 

[citation needed]

 

Never mind that after declaring them "not so different" (they are), you decided to make them more so.

post #35 of 95
Apple should offer a trade in program, with a credit toward a new phone; then sell the used phones off contract to these developing countries. Make $$ twice on each phone, the used phone at a lower margin.
post #36 of 95
Quote:
Originally Posted by gordy View Post

OMG, this again?  The iPhone 4, which runs rings around "free" phones, is $1 or less with a contract.

 

I think the tech media wags the dog with some of these stories.

 

 

True, but the prepaid and no contract markets are big. There you have to pay for the phone outright. 

post #37 of 95

Apple should protect the brand as "elite" and not offer lower cost models.  What they should do is make a model with a larger screen size!  5" would be perfect.

post #38 of 95
Apple already owns the majority profit share with their current market share. Focusing on the low-cost market won't help as much as some people think. They should focus on growing their high-cost market.
post #39 of 95

Schiller implies that Apple has no interest in developing a "cheaper iPhone".  Can't say it's definitive since the original article on his comments was translated into English.

 

http://www.idownloadblog.com/2013/01/10/phil-schiller-denies-budget-iphone/

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post #40 of 95
Quote:
Originally Posted by Ex iPhone Owner View Post

Apple should protect the brand as "elite" and not offer lower cost models.  What they should do is make a model with a larger screen size!  5" would be perfect.

I agree that Apple could make another phone. That phone would need to be substantially different such as in your example.

 

A cheap phone won't happen because if there is a cheap phone why would anyone buy the expensive one? If you get the same services just in a cheap package I suspect most people would go for the cheaper model because:

Apple's cheaper model would still be very nice (No way could Apple afford to make a really cheap and crappy phone that is so poor its not worth owning)

Apple's cheaper phone would have all the same services (Producing a limited iPhone would damage the Apple brand - clue: user experience)

 

 

There are high end product makers that make cheaper models but they tend to be really expensive, such as high end car manufacturers. But a phone is hardly in the same bracket. How many people would pay and extra $200.- just to have a nicer looking phone? I know, some people buy $200.- (and up) cases but I have personally never seen one. 

 

Makes no sense

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