Originally Posted by Frood
With more developed countries reaching a point of saturation or at least slowing growth, the growth markets demand a lower cost phone.
It is a challenge for Apple. If they do release one, is it going to be full featured? If it has all of the features of the high end phone, they are going to cannibalize. Consumers even in the more developed countries:
'Hmmm do I want to buy the high end one for $800 which is beautiful Aluminum and thin which I am going to spend $40 on a case which is extra fat and plastic in order to protect it, or spend $300 on one which is plastic to start with and has all the functionality'
That's the problem and it's not quite the same as the iPad mini. If you look at the following:
The one on the left is based on the iPod Touch design with a plastic shell, much like the photo that was posted earlier. I used a photo of the Nokia Lumia 820 to mockup the plastic case.
We know that the current iPhone 5 to the right sells for $650. We also know that the iPhone 4 currently sells for $450. Given that the iPod Touch 5G is $299, it's likely that the price would be above it, even though they can cut the 32GB of storage to 16GB. There's little point in making it the same price as the iPhone 4 - it would have to be significantly lower in price. IMO, this would point to a $350 price point.
The question is not how they build a phone for $350. The question is how do they sell a $650 phone when they have one that isn't much different for $350?
They'd both have 16GB storage, same display, the cheap one would have the A5 (which is the same CPU as the iPhone 4S), both have Facetime, both have wifi, both have decent cameras.
The iPad mini is different because it has a lower resolution screen, smaller size and the price difference is $170.
They could start having just two iPhone models - basic and premium and somehow lower the price of the top model so that you'd end up with say $350 and $550. That would allow them to get rid of the naming conventions.
Will that be enough to satisfy the prepaid markets though? $350 is still expensive when prepaid smartphones start as low as $100.