A report today from the Wall Street Journal, curiously timed in the middle of CES, has Apple working an less expensive iPhone. If this sounds familiar, it’s because we’ve heard this in previous years. Just a few days ago, analysts starting theorizing that Apple could rollout a smaller, cheaper iPhone mini.
Apple’s current strategy to target the lower-end market has been to discount older models. As new models get released, they cut the cost on older models. These are still perceived as ‘older’ models, which are affordable. This past few months has seen discounts on the flagship iPhone 5, with retailers like Best Buy offer $50 off the $199 price. A new, cheap iPhone would likely be priced at $99. Would a new lower-cost iPhone be more attractive than say an iPhone 4S? People who want ‘the new model’, but don’t necessarily need all of the features of the iPhone 5. An iPhone for kids, grandparents and those looking to save a few dollars.
Apple doesn’t need to produce a cheap iPhone for the US market, where they remain the top-selling smartphone. A lower cost iPhone would primarily help them gain traction internationally where cheap Android phones are doing well. The numbers tell the story. In Q3 2012, Apple held 14.6% of worldwide shipments, down from 23% in Q4 of 2011. Samsung meanwhile has seen a jump from 8.8% to 31.3% from Q3 2010 to the same quarter in 2012.
Sources say this new iPhone could be made with a different, less expensive body with parts from older iPhone models. It would also help with the transition from the 30-pin dock connector to the new Lightning cables.
Apple doesn’t do cheap, but this might be the year we see them do inexpensive. A sub-$100 iPhone would be just that. If this does happen, I’d expect there to be some appeal to this new iPhone, other than price. Colors, size. The iPad mini is a perfect example. It’s a lower cost device, but has demand from those who are willing to forgoe various high end features for the thinner, smaller iPad.