Apple again predicted to build low-cost iPhone for emerging markets
With the most significant growth in the smartphone market coming from low-end handsets that are popular in emerging markets, one prominent financial firm has said it continues to believe Apple will expand the iPhone lineup with a new entry-level model.
Outside of the top six smartphone makers are a plethora of low-end handset makers, many of them from China, which already account for 28 percent of the total industry. Barclays believes the share of those companies will grow by 70 percent next year, and another 27 percent in 2014, driven by sales of inexpensive smartphones in China.
"We recognize that a key test of Apple's long-term model will be whether the company can capture the growth associated with a new wave of emerging market consumers who could enter the smartphone market through low priced Android devices," analyst Ben A. Reitzes wrote in a note to investors on Wednesday.
"In our opinion, Apple can benefit from those upgrading to higher end smart phones later on but the company also needs to make sure it can 'hook' customers into the Apple ecosystem early enough in the upgrade cycle to prevent more customers from developing loyalty to Android."
While Reitzes believes Apple will continue to capture the most profitable segments of the smartphone market in 2013, he has speculated that Apple will look to enter the low-end smartphone market in the next one to two years by introducing a new, cheaper model.
"We imagine an iPhone at a low price point to capture the initial smartphone purchase from customers upgrading from feature phones ??pushing new customers into the Apple ecosystem," he said. "We believe Apple can sell a phone with an inexpensive casing for emerging markets and a (bill of materials) below $150."
This hypothetical low-end iPhone would be sold without a service contract or carrier subsidy. Reitzes also noted that it would not be unprecedented for Apple to offer a new low-end device, as it has done already with its iPod and iPad lineups.
Apple already continues to sell its two previous-generation handsets alongside the latest flagship model to reach lower price points. Currently, an 8-gigabyte iPhone 4 is available for free with a new two-year service contract, while an unlocked and contract-free iPhone 4 is sold by Apple for $450.
Prior to the launch of the iPhone 5 in September, some market watchers speculated that Apple could continue to sell the iPhone 3GS, first released in 2009, as its mythical low-cost handset in emerging markets. But those predictions proved inaccurate when Apple opted to discontinue the iPhone 3GS entirely.
Speculation about a low-cost, entry-level iPhone has persisted for years, but while Apple recently expanded its iPad lineup with the new $329 iPad mini, it has not grown the iPhone lineup beyond releasing one new model per year. Instead, Apple has continued to grow sales by expanding to more carriers and conducting a global roll-out of its latest models on a much faster scale, while continuing to sell the two previous generations of iPhones at lower prices.
Earlier this year, it was said that cheap smartphones running Google's Android operating system have been "crushing" Apple's iPhone in developing markets where customers do not typically sign service contracts. That helped to further fuel speculation that Apple will eventually offer an inexpensive unsubsidized iPhone for emerging markets like China.
Outside of the top six smartphone makers are a plethora of low-end handset makers, many of them from China, which already account for 28 percent of the total industry. Barclays believes the share of those companies will grow by 70 percent next year, and another 27 percent in 2014, driven by sales of inexpensive smartphones in China.
"We recognize that a key test of Apple's long-term model will be whether the company can capture the growth associated with a new wave of emerging market consumers who could enter the smartphone market through low priced Android devices," analyst Ben A. Reitzes wrote in a note to investors on Wednesday.
"In our opinion, Apple can benefit from those upgrading to higher end smart phones later on but the company also needs to make sure it can 'hook' customers into the Apple ecosystem early enough in the upgrade cycle to prevent more customers from developing loyalty to Android."
While Reitzes believes Apple will continue to capture the most profitable segments of the smartphone market in 2013, he has speculated that Apple will look to enter the low-end smartphone market in the next one to two years by introducing a new, cheaper model.
"We imagine an iPhone at a low price point to capture the initial smartphone purchase from customers upgrading from feature phones ??pushing new customers into the Apple ecosystem," he said. "We believe Apple can sell a phone with an inexpensive casing for emerging markets and a (bill of materials) below $150."
This hypothetical low-end iPhone would be sold without a service contract or carrier subsidy. Reitzes also noted that it would not be unprecedented for Apple to offer a new low-end device, as it has done already with its iPod and iPad lineups.
Apple already continues to sell its two previous-generation handsets alongside the latest flagship model to reach lower price points. Currently, an 8-gigabyte iPhone 4 is available for free with a new two-year service contract, while an unlocked and contract-free iPhone 4 is sold by Apple for $450.
Prior to the launch of the iPhone 5 in September, some market watchers speculated that Apple could continue to sell the iPhone 3GS, first released in 2009, as its mythical low-cost handset in emerging markets. But those predictions proved inaccurate when Apple opted to discontinue the iPhone 3GS entirely.
Speculation about a low-cost, entry-level iPhone has persisted for years, but while Apple recently expanded its iPad lineup with the new $329 iPad mini, it has not grown the iPhone lineup beyond releasing one new model per year. Instead, Apple has continued to grow sales by expanding to more carriers and conducting a global roll-out of its latest models on a much faster scale, while continuing to sell the two previous generations of iPhones at lower prices.
Earlier this year, it was said that cheap smartphones running Google's Android operating system have been "crushing" Apple's iPhone in developing markets where customers do not typically sign service contracts. That helped to further fuel speculation that Apple will eventually offer an inexpensive unsubsidized iPhone for emerging markets like China.
Comments
They did a 4GB… 3G, right? That was in Canada. That was an emerging market?
Heck, they don't even need to change anything; just take 20% margins instead of 25% on the lowest model iPhone 4.
Quote:
Originally Posted by Tallest Skil
They did a 4GB… 3G, right? That was in Canada. That was an emerging market?
Heck, they don't even need to change anything; just take 20% margins instead of 25% on the lowest model iPhone 4.
you know... 400€ for a 3 year old phone is far from cheap in countries where everyone earns less than 500 € per month.
However...
This story is BS, obviously.
So now they figure if they keep saying there will be a cheap iPhone and real TV --
These guys are talking a phone that at full price is no more than $100
Originally Posted by charlituna
So now they figure if they keep saying there will be a cheap iPhone and real TV --
Been saying the latter for seven years. Doesn't make 'em right.
Originally Posted by charlituna
These guys are talking a phone that at full price is no more than $100
I'm sorry, these people are allowed into society? Much less listened to as anything but a parody of reality like Scoopertino? People make financial decisions based on what these fools say?!
How stupid can they possibly be? Flip phones cost more than $100 at their full prices!
"Bill of materials below $150"; the iPhone already HAS that!
This Mork from Ork reporting on a new small iPhone Nano nano...
An iPhone 4 is a better choice as it has the same screen as the 4s. Thus when the 5s is released, the 4 becomes a reasonable phone o retain.
As it stands, I think the barrier in emerging markets is the broadbandwidth. If you don't have HSPA in your region, why even have a iPhone?
I'm thinking that an iPod nano-esque Wi-fi only iPhone mini with an embedded OS instead of iOS may not be a terrible idea. It wouldn't cannibalize iPhone sales, and would deal a huge blow to the low-end Android handset market. The whole point of this portfolio strategy of course, would be to hurt Android.
You can't deny this makes more sense after seeing Apple launch the iPad mini with re-purposed components.
Quote:
Originally Posted by pedromartins
you know... 400€ for a 3 year old phone is far from cheap in countries where everyone earns less than 500 € per month.
However...
This story is BS, obviously.
The question is - what exactly would Apple do to create a low cost alternative. Like you say 20% less does not make for a cheap phone - and I can't see what they would do to significantly reduce the price and still want to keep the Apple logo on it.
Quote:
Originally Posted by ChuckD
I'm thinking that an iPod nano-esque Wi-fi only iPhone mini with an embedded OS instead of iOS may not be a terrible idea. It wouldn't cannibalize iPhone sales, and would deal a huge blow to the low-end Android handset market. The whole point of this portfolio strategy of course, would be to hurt Android.
You can't deny this makes more sense after seeing Apple launch the iPad mini with re-purposed components.
A value less exercise. I think Apple has better thinks to do with their time than to hurt Android in these markets just for the hell of it.
Originally Posted by ChuckD
…Wi-fi only…
Why?
…mini…
Zero apps.
…with an embedded OS instead of iOS…
How… what's the distinction?
It wouldn't cannibalize iPhone sales…
"Hmm, should I buy this phone instead of the regular iPhone? No, I'd rather have the device with the ability to have cell data at some point in the future and apps at any point."
You can't deny this makes more sense…
Anyone can certainly do that, just as they can deny it making any sense to make one at all.
…after seeing Apple launch the iPad mini with re-purposed components.
… Other than the A5, what components weren't entirely new?
Quote:
Originally Posted by paxman
The question is - what exactly would Apple do to create a low cost alternative. Like you say 20% less does not make for a cheap phone - and I can't see what they would do to significantly reduce the price and still want to keep the Apple logo on it.
make an android device. lol
This is pure fantasy of course and Apple will never do it (at least not in the way described here), but even if they did it would sell far better in the "non-emerging" markets than it would in the "emerging" ones. Plus the whole idea of making a phone specifically for poor folks in India and Africa is more than a bit distasteful. I don't know how they get away with saying it all the time.
Why not just say "entry-level, off-contract phone"? I'm sure more than just the Africans would be interested in such a thing if it ever happened.
Quote:
Originally Posted by charlituna
These guys are talking a phone that at full price is no more than $100
I just don't see the point. There's no money to be made, and typical users aren't going to be, "developing loyalty to Android."
We're talking about people who, once they get the phone aren't going to be investing much, if anything, in the ecosystem. Thus, there's really no significant cost to switch. (And, other than a few geeks, I don't think we'll see anyone, "developing loyalty to Android," on any other basis.) Also, in these markets, owning an Apple product is likely to be a status symbol, so, if they can afford it, they aren't going to blink before switching. (Think cars, for example, does anyone develop loyalty to cheap car brands?) Probably, the "Android dominance" in these markets accounts for not only a good bit of Androids marketshare, but also a good bit of the disparity in web usage we see, where Android usage is minuscule compared to iOS, despite the fact that the claimed marketshare is higher.
In other words, unless Apple decides that marketshare is more important than profits, there's nothing in it for them to build a low-cost iPhone for emerging markets, nothing gained by doing it, nothing lost by not doing it.
I don't think Apple will go after that market. They never had with any other products. They don't make cheap plastic Macbook Airs just to gain market share.
I despise these meddling analysts to pieces.
Quote:
Originally Posted by Tallest Skil
Why?
Hello? Apple faces an ecosystem war against Google and Amazon.
Tim Cook keeps coming back to the low to non-existing web-browsing usage amongst Android users, and we all know they're cheapskates that won't pay for quality apps. A wifi-only iPhone mini would target this typical Android user behavior and bring down monthly service costs.
Quote:
Originally Posted by Tallest Skil
How… what's the distinction?
Doesn't cause headaches for iOS developers having to support yet another iPhone model.
Quote:
Originally Posted by Tallest Skil
Anyone can certainly do that, just as they can deny it making any sense to make one at all.
Just as long as you truncate the most important part of someone's point. Just tell me, why did Apple make an iPad mini to begin with?
Quote:
Originally Posted by Tallest Skil
… Other than the A5, what components weren't entirely new?
iPad mini screen is the same 163ppi iPhone 3GS screen simply cut in a bigger size.
Quote:
Originally Posted by Tallest Skil
"Hmm, should I buy this phone instead of the regular iPhone? No, I'd rather have the device with the ability to have cell data at some point in the future and apps at any point."
What part of the term "emerging markets" do you not understand?
I'm all for the smaller form-factor as an option, but doing *anything* primarily to harm a competitor is a bad business strategy. Offering more products dilutes the experience, unless they are somehow able to expand the overall ecosystem: Would selling a 2.5" screen iPhone Nano help to increase sales of an iPad or iPad mini?
BTW, Android isn't hurt most by unit sales, it is hurt by: slower upgrade cycles for customers, lower profit potential for developers, and a perception that it isn't as good as iOS.
Originally Posted by ChuckD
Hello? Apple faces an ecosystem war against Google and Amazon.
So? This means what, in "requiring" a cheaper iPhone?
Tim Cook keeps coming back to the low to non-existing web-browsing usage amongst Android users…
In what capacity?
…won't pay for quality apps. A wifi-only iPhone mini would target this typical Android user behavior and bring down monthly service costs.
Except only in the US and Canada are data plans forced. Except apps ? cell data. You're saying "cell data is too expensive, so don't let them have apps". I don't get it.
Doesn't cause headaches for iOS developers having to support yet another iPhone model.
Brand new OS for Apple to support, zero apps for it, entirely new ecosystem… It's a wretched idea.
If it doesn't run iOS, it's not an iPhone. And you still didn't answer my question.
Just tell me, why did Apple make an iPad mini to begin with?
Still trying to figure it out, myself. Your idea, however, is completely and utterly different in every measurable way from the iPad mini.
iPad mini screen is the same 163ppi iPhone 3GS screen simply cut in a bigger size.
And that's somehow a "recycled" component?
What part of the term "emerging markets" do you not understand?
What part of "Apple doesn't compromise on experience" is unclear to you?