Originally Posted by Rogifan
It's hard to release something cheaper yet keep high margins. Apple said the iPad mini had the lowest margins of any Apple device. But with the mini Apple didn't sacrifice quality for the sake of margins. I'm sorry but those candy colored plastic cases look cheap. Not something I would spend $400 or more on. I don't think Apple can play in the low end space yet still expect to get high end like margins.
We are beyond the era where $400 is considered as a cheap phone. Around $300 you can now get a phone with a quad core processor, 2GB RAM, 16 GB Flash, Full HD 1920x1080 display, 3000MAh battery, and Android 4.2.2 (Micromax Canvas 4 expected to launch at that price/specs tomorrow). Even Samsung is seeing considerable pressure from these second rung Android phones that have got the spec comparison covered. Secondly, the $400 phone would be too close to the flagship iPhone that there would be considerable risk of cannibalization.
Apple's best bet is to release a $200 phone - that would be regular screen (not retina), 4GB flash, A4 processor, plastic body, 512MB RAM, etc. Pretty much the iPhone 3GS with an A4 processor, and with much lesser flash. This is the sort of device that would cost very little to make, have phenomenal volumes, and have zero risk of cannibalizing the flagship phone. This is the price at which iPhone can have tremendous impact in developing world, and have massive market share.
Apple was selling the iPhone 3GS for $300 over a year back. It should be easily possible for Apple to upgrade the processor, and sell it for $200 today, with much higher volumes.
But more importantly, I think Apple needs to lower the prices of the flagship phones too. I would suggest a triple strategy - $600 for the highend flagship, $400 for flagship phones with lesser flash - 8GB, lesser RAM (1GB), plastic body/back, without LTE & 11ac support. The cheap iPhone can be priced at $200. This would cover all bases for Apple and make significant difference to their market share. This is the sort of move that would crush Android.