By Binu Paul email: firstname.lastname@example.org | Feb 12, 2013 08:23 AM EST
The talks about a low-cost Apple iPhone are back again and this time, Topeka Capital analyst Brian Whit says the tech giant will release a low-priced iPhone this year which will be called 'iPhone mini' or 'iPhone Air.'
"Now confident that a lower-priced iPhone will be launched by Apple in 2013, possibly as early as June." White wrote.
White speculated that the cheaper version of iPhone could have an unsubsidized price in the $250-$350 range, Forbes reported. As the price falls well below the $649 price for an unlocked 16 GB iPhone 5, the cheaper iPhone will definitely open up a better market for Apple in international markets such as Brazil, Russia, China, India and elsewhere. "We believe a $250-to-$300 price point will allow Apple to significantly expand its reach in the smartphone market and better address developing markets," he said.
He says an iPhone in the $250-$300 price range could pose a direct competition to China-based Xiaomi that offers high-end smartphones at a mid-range price of $320 in China. White predicted that such a phone would have a lower margin than the full-priced iPhone, however, would be above the corporate average when sold in volume.
Meanwhile, Pacific Crest analyst Andy Hargreaves opined that there would not be much profit from a low-cost model of the device, Barron's reported. "The concept of a cheap iPhone violates Apple's core operating principles because we cannot think of a single thing that a low-priced iPhone would do better than the current iPhones," he wrote. While accepting that a low-priced iPhone can improve Apple's overall smartphone sales volume, Hargreaves notes that margin on the device would be just $70 per unit, which is a petite profit margin compared to a gross margin of $295 per unit for the iPhone 5.
There has been a surge of rumors about the cheaper iPhone model following the recent citing of iPhone 5S in a Foxconn factory in China. The leaked images, giving the first glimpse into the design and dimensions of the most-awaited Apple smartphone, were posted on a blog on Chinese Web site Zol.com.cn. The images showed a product, very similar to iPhone 5, in various stages of production and it was rumored that this could be the assembly line of iPhone 5 knock-offs.
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