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Pegatron CEO: Apple's 'low-cost iPhone' will not be cheap

post #1 of 71
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Speaking at his company's shareholders meeting on Thursday, Pegatron CEO T.H. Tung said Apple's much rumored low cost iPhone won't be a budget offering, seemingly confirming speculation that the handset will be sold as a higher-end middle tier device.

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Tung disagreed with rumors that called Apple's lower-end offering "cheap," saying the "price is still high," reports the China Times (via Mac Otakara).

The executive said products currently on the market can carry a number of names, but "cheap" is not one that should be associated with Apple's less expensive iPhone. He went on to say that, compared to feature phones, smartphones are increasingly offering more value for the price.

The statements appear to confirm previous reports that Pegatron is handling at least a portion of the as-yet-unannounced iPhone's manufacture. A report in May claimed Pegatron is reportedly preparing to hire some 40,000 workers sometime in the second half of 2013, adding fuel to the low-cost iPhone fire.

Analysts and media sources are divided as to which of Apple partners will be responsible for the majority of production, with some claiming Foxconn is to pull most of the burden.

KGI analyst Ming-Chi Kuo in March said the two companies will nearly split manufacturing duties for the low-cost version, while Pegatron would take on a bigger share of continued iPhone 4 and 4S production.

On Wednesday, AppleInsider offered a first look at 3D renderings of so-called "iPhone Lite," which were made by a well-known third-party case maker from schematics it received. If the blueprints are authentic, the new design boasts curved edges and a slightly thicker frame than the current iPhone 5, which is in line with previous rumors.
post #2 of 71
It will probably cost $99 with a contract.
Similar price ration as the iPad Mini to the iPad.
It will sell like crazy...

Gotta keep a healthy margin.
Time will tell.
post #3 of 71
If you thought it was going to be cheap, you haven't been paying attention
post #4 of 71
Just like Apple mopped up the competition when it offered a broad range of iPods, they're going to do the same when they broaden the iPhone offering. It doesn't really matter what they do hardware-wise, as long as the consumer experience is no different, or rather no less, than any other iOS device.
post #5 of 71

Do we have to go through the same thing again as we went through with the rumors on the price of the iPad Mini, before it was announced?

 

You'd think everyone would have figured out by now that Apple doesn't do "cheap." Instead they just do "less expensive" ...than their previous or existing similar product.

post #6 of 71

What Apple will be doing is shifting most of internal parts of 4S to the new body containing new connector Lightning so

you get one whole happy family in connection, Bluetooth & maybe Wi-Fi. 

post #7 of 71
the iPod touch (w/camera) is $299. The iPhone won't go below that. The current iPhone is $649... If the low-cost iPhone comes in at $449, I'd say that would hit the target. They would be able to retire the 4 & 4S, and sell this one free on contract. Plus, it would put 4" displays across the board.
post #8 of 71
When people said it will be cheap they meant in comparison to the 5, which unlocked here costs €679 ($900) for the 16 GB model.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #9 of 71
Quote:
Originally Posted by OllieWallieWhiskers View Post

the iPod touch (w/camera) is $299. The iPhone won't go below that. The current iPhone is $649... If the low-cost iPhone comes in at $449, I'd say that would hit the target. They would be able to retire the 4 & 4S, and sell this one free on contract. Plus, it would put 4" displays across the board.

Whatever pricing it is, your thinking makes sense. They need to obliterate 3.5" displays ASAP.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #10 of 71
Quote:
Originally Posted by Lun_Esex View Post

Do we have to go through the same thing again as we went through with the rumors on the price of the iPad Mini, before it was announced?

You'd think everyone would have figured out by now that Apple doesn't do "cheap." Instead they just do "less expensive" ...than their previous or existing similar product.

You're saying what everyone knew. It was only the analysts who were "confused" or messing with the stock market.

Possible statement from a Wall St. analyst: "My wife has 1M shares in AAPL. What's that got to do with me?"
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #11 of 71

The 4 and 4S are old phones by now so people can stop saying "they already have a cheaper phone in the 4 and 4s, no need to do this".  The 4/4s already target the middle tier so I see this as just a replacement of those models but with a larger appeal to emerging markets.  I just hope the cannibalization rate is not too high like we saw with the mini and margins go down further.  Hope when they announce these new phones that they announce a deal with CM at the same time but I am starting to think that deal will never happen. 

post #12 of 71

The 4 and 4S are old phones by now so people can stop saying "they already have a cheaper phone in the 4 and 4s, no need to do this".  The 4/4s already target the middle tier so I see this as just a replacement of those models but with a larger appeal to emerging markets.  I just hope the cannibalization rate is not too high like we saw with the mini and margins go down further.  Hope when they announce these new phones that they announce a deal with CM at the same time but I am starting to think that deal will never happen. 

post #13 of 71
My only hope is that the design would be more unique than just a plastic back.

If it is plastic there are unique and creative things Apple could do with the design and shape to make it unique from the main iPhone.

Maybe they could make shrink the top and bottom bezels of the device in the same way the iPad Mini shrunk the side bezels for the iPad?

Maybe a tear drop design? They could feasibly make this phone thinner than the 5. iPhone Air maybe?

If it just looks like a 3GS that could be a missed opportunity.
post #14 of 71
Are we buying this story? Would the Pegatron CEO really disclose something like this publicly? I can't imagine Apple would be too keen on him blabbing Iike this. Aren't these companies under NDA's?
post #15 of 71
Quote:
Originally Posted by blackbook View Post

My only hope is that the design would be more unique than just a plastic back.

If it is plastic there are unique and creative things Apple could do with the design and shape to make it unique from the main iPhone.

Maybe they could make shrink the top and bottom bezels of the device in the same way the iPad Mini shrunk the side bezels for the iPad?

Maybe a tear drop design? They could feasibly make this phone thinner than the 5. iPhone Air maybe?

If it just looks like a 3GS that could be a missed opportunity.

iPad mini isn't plastic. None of the iPods are plastic. Not sure why a lower cost iPhone would have to be plastic.
post #16 of 71
Quote:
Originally Posted by Applehawk View Post

The 4 and 4S are old phones by now so people can stop saying "they already have a cheaper phone in the 4 and 4s, no need to do this".  The 4/4s already target the middle tier so I see this as just a replacement of those models but with a larger appeal to emerging markets.  I just hope the cannibalization rate is not too high like we saw with the mini and margins go down further.  Hope when they announce these new phones that they announce a deal with CM at the same time but I am starting to think that deal will never happen. 

How does the 4/4s being old make that argument invalid? For that matter, how does putting 4/4s components in a different case make a new phone?

I can see an argument for apple redesigning the 4s to eliminate the smaller screen and 30 pin connector, but that's a one time deal. I simply cannot understand people who think apple should spend time and money redesigning and revamping production lines for products that they already have on shelves.
post #17 of 71

I think this is just a replacement for the 4S that has a 4 inch display and a lightning connector. The line-up will be this/5/5S instead of 4S/5/5S. It's so they can use the same displays and have everything on the lightning connector, nothing else.

post #18 of 71

IMO - to continue to stay relevant any company needs to tweak their products from time to time.  Just continuing to sell a phone that is 2+ years old does more harm to apple.  I am sure there will be additional upgrades in the new phone than just swapping out 4/4s components and replacing them in the new phone.  We are all seeing what selling a large amount of 4/4s models now are doing to their margins so I am assuming that apple knows what they are doing and the new phone will sport healthier margins than what the 4/4s currently is giving them.

post #19 of 71
Quote:
Originally Posted by OllieWallieWhiskers View Post

the iPod touch (w/camera) is $299. The iPhone won't go below that. The current iPhone is $649... If the low-cost iPhone comes in at $449, I'd say that would hit the target. They would be able to retire the 4 & 4S, and sell this one free on contract. Plus, it would put 4" displays across the board.

That makes sense.....we know if Apple makes it it won't be cheap.......they might have a lower priced offering...but not cheap as in lower standards....

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post #20 of 71
Quote:
Originally Posted by Rogifan View Post

iPad mini isn't plastic. None of the iPods are plastic. Not sure why a lower cost iPhone would have to be plastic.

The options for an iPhone would either be plastic or glass.

Cellular signals don't go through aluminum. So we could see an aluminum device with a plastic "window" for the wireless signals much like the iphone 1. Or we could see an entirely plastic back like the 3G/3GS.

Glass is also a possibility. We could see a deosgb similar to the 4/4S, but production costs may be an issue at that point.

It all depends if Apple is going for a $399ish price or a $499ish price. Both would stil quantify as "low-cost" by Apple standards but the price determines what materials etc to expect.
post #21 of 71
Quote:
Originally Posted by blackbook View Post


The options for an iPhone would either be plastic or glass.

Cellular signals don't go through aluminum. So we could see an aluminum device with a plastic "window" for the wireless signals much like the iphone 1. Or we could see an entirely plastic back like the 3G/3GS.

Glass is also a possibility. We could see a deosgb similar to the 4/4S, but production costs may be an issue at that point.

It all depends if Apple is going for a $399ish price or a $499ish price. Both would stil quantify as "low-cost" by Apple standards but the price determines what materials etc to expect.

I am not sure about the aluminum part...there are phones on the market that are aluminum that have no signal issues.

I agree with you on the 3G/3GS and the plastic backs...they could be similar to that.....

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post #22 of 71
Quote:
Originally Posted by Rogifan View Post

iPad mini isn't plastic. None of the iPods are plastic. Not sure why a lower cost iPhone would have to be plastic.

Plastic is much easier to get the signal in and out of the phone without losing quality or the signal itself. It wouldn't necessarily require massive antenna testing and engineering like the most recent versions of the iPhone did. I would like to see colored anodized aluminum like the current iPod Touch however like I said I think that would be expensive. Its a little different creating an aluminum iPad, even with LTE vs an aluminum iPhone where you hold it differently, put it up to your ear, etc...things you don't do with an iPad or iPad mini.

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post #23 of 71

Apparently he didn't get the memo to double down on secrecy y'all.

post #24 of 71
So with the advent of the new 5S, the 5 replaces the 4S in its current price point. Instead of the 4S replacing the 4 as the cheapest iPhone in the range, it is retired (along with the 4) and the new 'iPhone Lite' fills this price point. In this way Apple unifies the range to both 4 inch screen and Thunderbolt connection. But no change to their pricing strategy.
post #25 of 71
Quote:
Originally Posted by blackbook View Post

My only hope is that the design would be more unique than just a plastic back.

If it is plastic there are unique and creative things Apple could do with the design and shape to make it unique from the main iPhone.

Maybe they could make shrink the top and bottom bezels of the device in the same way the iPad Mini shrunk the side bezels for the iPad?

Maybe a tear drop design? They could feasibly make this phone thinner than the 5. iPhone Air maybe?

If it just looks like a 3GS that could be a missed opportunity.

A plastic phone will be thicker.
post #26 of 71
Quote:
Originally Posted by Ireland View Post

When people said it will be cheap they meant in comparison to the 5, which unlocked here costs €679 ($900) for the 16 GB model.

Actual when I hear "cheap iPhone", I think they mean sub $300 off contract.
Quote:
Originally Posted by Applehawk View Post

IMO - to continue to stay relevant any company needs to tweak their products from time to time.  Just continuing to sell a phone that is 2+ years old does more harm to apple.  I am sure there will be additional upgrades in the new phone than just swapping out 4/4s components and replacing them in the new phone.  We are all seeing what selling a large amount of 4/4s models now are doing to their margins so I am assuming that apple knows what they are doing and the new phone will sport healthier margins than what the 4/4s currently is giving them.

How does it do more harm? Both are selling well. Apple won't release a cheap iPhone with the same components as the current flagship. If it's going to release a low cost iPhone, why wouldn't they use previous years' components? I think it'll still be a rejiggered 4 with lightning, 3.5" screen and perhaps not all glass at say $350-400 off contract.
post #27 of 71
I think this comment is less credible than leaks of photos, etc. We have seen putative quotes from suppliers before. Most often, the supplier would retract their comments or claim to have been misquoted. The fact is that no single supplier would know what Apple's price will be. The fact is that while the company doing the final assembly may know about most of the parts going into a phone, they would not know how much Apple is paying for said parts.

I think, in the best case scenario, this executive is speculating. More likely, he has been misquoted. I would say, however, his speculation is based on rational thinking.

One more thought, Pegatron is a spinoff from Asus, for whatever that is worth.
post #28 of 71

Just a thought: what if Apple release an iPhone Lite at $329, same price as the lowest end iPad Mini? You can then buy an iPhone Lite and an iPad Mini for the price of an iPhone 5X / 6.

 

The iPhone Lite must be priced below $400. The iPhone 4 already occupies that price point but it's not consider the less expensive phone that people are looking for. Maybe with upgraded hardware, the value proposition will be different. But clearly, the market has spoken: $400 is not "cheap" enough.

post #29 of 71
Quote:
Originally Posted by jungmark View Post


Actual when I hear "cheap iPhone", I think they mean sub $300 off contract.
How does it do more harm? Both are selling well. Apple won't release a cheap iPhone with the same components as the current flagship. If it's going to release a low cost iPhone, why wouldn't they use previous years' components? I think it'll still be a rejiggered 4 with lightning, 3.5" screen and perhaps not all glass at say $350-400 off contract.

Both are doing well becuase it is basically free which is putting pressure on margins.  I am assuming the new phone will have better margins than the 4/4s.

post #30 of 71
Quote:
Originally Posted by Applehawk View Post

The 4 and 4S are old phones by now so people can stop saying "they already have a cheaper phone in the 4 and 4s, no need to do this".  The 4/4s already target the middle tier so I see this as just a replacement of those models but with a larger appeal to emerging markets.  I just hope the cannibalization rate is not too high like we saw with the mini and margins go down further.  Hope when they announce these new phones that they announce a deal with CM at the same time but I am starting to think that deal will never happen. 

Seeing as China Mobile wants to control and receive a large cut from the App Store (according to rumor), I hope Apple never does a deal with them.

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post #31 of 71
Quote:
Originally Posted by Applehawk View Post

Both are doing well becuase it is basically free which is putting pressure on margins.  I am assuming the new phone will have better margins than the 4/4s.

They are not free, just subsidized by the carriers. Lets say they are charging 450 and 550 for the 4 and 4S, respectively. Still higher than this cheap iPhone. Unless Apple uses cheap-ass components ( which is highly unlikely) or different case (possibly), margins would be lower.
post #32 of 71
Quote:
Originally Posted by WestByfleet View Post

So with the advent of the new 5S, the 5 replaces the 4S in its current price point. Instead of the 4S replacing the 4 as the cheapest iPhone in the range, it is retired (along with the 4) and the new 'iPhone Lite' fills this price point. In this way Apple unifies the range to both 4 inch screen and Thunderbolt connection. But no change to their pricing strategy.

Either this or apple is preparing to launch a phone that somehow distinguishes itself from the current lineup in a way nobody expects. Otherwise, this thing doesn't exist.

In any case these rumors are way off.
post #33 of 71
Quote:
Originally Posted by jungmark View Post


They are not free, just subsidized by the carriers. Lets say they are charging 450 and 550 for the 4 and 4S, respectively. Still higher than this cheap iPhone. Unless Apple uses cheap-ass components ( which is highly unlikely) or different case (possibly), margins would be lower.

For me its all about margins so if that is the case then I would not be for it.  Increasing market share at the expense of margins is not the Apple way.

 

Being free or not free is just how you look at it.  When i went in to buy an iphone for my son last month I walked out with a 4 and paid $0 for it.  I understand it is subsidized by the carriers. 

post #34 of 71
Quote:
Originally Posted by iaeen View Post

Either this or apple is preparing to launch a phone that somehow distinguishes itself from the current lineup in a way nobody expects. Otherwise, this thing doesn't exist.

In any case these rumors are way off.

Actually, the rumors aren't that far off-it's just a matter of picking the right one.

There are rumors of bigger iPhones, smaller iPhones, colored iPhones, thinner iPhones, iPhones with sharp corners, iPhones with rounded corners, iPhones with limited capabilities, iPhones will full capabilities, iPhones with capabilities no one has heard of, and on and on.

No matter WHAT happens, someone has predicted it. The only problem is that no one knows WHICH of the predictions will come true.
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post #35 of 71

This makes no sense to me. The previous generation iPhones have been the cheaper models. I would rather have a high grade last generation model than a new, underpowered, plastic one.

post #36 of 71
Quote:
Originally Posted by Applehawk View Post

Both are doing well becuase it is basically free which is putting pressure on margins.  I am assuming the new phone will have better margins than the 4/4s.

Quote:
Originally Posted by Applehawk View Post

For me its all about margins so if that is the case then I would not be for it.  Increasing market share at the expense of margins is not the Apple way.

Being free or not free is just how you look at it.  When i went in to buy an iphone for my son last month I walked out with a 4 and paid $0 for it.  I understand it is subsidized by the carriers. 

But being free in the way you are proposing does not put pressure on the margins.
post #37 of 71
Quote:
Originally Posted by jragosta View Post

Actually, the rumors aren't that far off-it's just a matter of picking the right one.

There are rumors of bigger iPhones, smaller iPhones, colored iPhones, thinner iPhones, iPhones with sharp corners, iPhones with rounded corners, iPhones with limited capabilities, iPhones will full capabilities, iPhones with capabilities no one has heard of, and on and on.

No matter WHAT happens, someone has predicted it. The only problem is that no one knows WHICH of the predictions will come true.

Fair enough, but I was referring to the rumors that they were preparing a cheap iPhone that has stripped out features in order to compete on the low end of the market.
post #38 of 71

I've been thinking that Apple, with about 275 carriers worldwide versus about 800 through which samsung sells its smartphones, should review the markets covered by the 500 carriers Apple does not sell through and select maybe 150 - 200 of those markets that would support a mid-priced iPhone and launch the new lower-cost iPhone into those markets along with select markets currently covered under Apple's existing carriers.  This would expand Apple's reach while not threatening Apple's premium product offering and pricing in most of its premium markets, such as the U.S. (where I would not introduce the mid-priced iPhone).  Any thoughts?

I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.
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post #39 of 71
Quote:
Originally Posted by jragosta View Post


Actually, the rumors aren't that far off-it's just a matter of picking the right one.

There are rumors of bigger iPhones, smaller iPhones, colored iPhones, thinner iPhones, iPhones with sharp corners, iPhones with rounded corners, iPhones with limited capabilities, iPhones will full capabilities, iPhones with capabilities no one has heard of, and on and on.

No matter WHAT happens, someone has predicted it. The only problem is that no one knows WHICH of the predictions will come true.

 

Perfect! excellent post......i agree.....there are soooo many predictions and it will only get worse.....it is going to be a long summer of all kinds of predictions.

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post #40 of 71
All this talk about what the case is going to be made of...that alone isn't going to make much of a price difference. So beyond the external appearance, what else might change to get the price lower? Less RAM, cheaper flash storage, simpler CPU/GPU, smaller battery, less capable camera(s), or eliminate one camera like the low-end Touch (that alone would probably save more money than changing the case)? Where can Apple make cuts to lower the price while still preserving a high-quality user eperience? Will iOS 7 run differently, perhaps forgo some of the fancy UI effects so it can run better on a lower-end processor?

And perhaps most importantly (to me at least) will anything be "crippled" artificially in order to better differentiate between a regular iPhone and the "cheap" model and provide an "up-sell" path? For example, maybe not allow tethering?

All just speculation of course, but why limit the fun to just talking about if the case will be aluminum or plastic? :)
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