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Low-Cost iPhone Could Be Risky for Apple
Low-Cost iPhone Could Be Risky for Apple
By Adam Dickter / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
AUGUST
21
2013


For the first time in the history of the iPhone, Apple will soon release two versions at the same time, a new report citing a top supplier claims. But if one of them is a low-cost device aimed at emerging markets, the company will be assuming some risk.

That's because Apple is typically perceived as a high-end brand, and in other markets it will have to compete with low-end manufacturers like China's Huawei, which already deal with cheap devices.

Gray Market

"I think they'll find the phone will change how people view the company and not in a good way," said technology consultant Rob Enderle. "They've had trouble with distribution outside of the U.S. as well and this would put more pressure on a system that hasn't worked that well for them, certainly not as well as U.S. distribution has. So I'd expect a lot of gray market product shifting to countries where they don't want it."

Refreshes of the device have usually followed a schedule of a major upgrade followed by a minor one, which means the 5S is next, with improvements over the biggest redesign so far, the iPhone 5, which had a bigger screen and long-term evolution high speed data access in addition to the usual faster processor and better camera.

But with Apple seeking a bigger foothold in emerging markets abroad, it is only a matter of time before the Cupertino, Calif.,-based tech giant releases a scaled-down iPhone it can make and sell on the cheap. That time has come, according to The Wall Street Journal. Citing sources close to the supplier Hon Hai Precision Industry Co. in Taiwan, the paper said Apple has asked Hon Hai "to begin shipping both a new high-end and low-end iPhone in early September."

The iPhone remains the world's most popular smartphone but is losing ground to Android-powered devices, most of which are made by South Korea's Samsung.

The latest report on the global smartphone market earlier this month by IDC Research found Android growing substantially to nearly 80 percent, and while Apple's iOS shipments have also grown, its overall share of the market sank from 16.6 percent a year ago to 13.2 percent.

Putting lower-cost models out that can get iPhones in the hands of first-time users is crucial to Apple. The company could just focus on its existing, older models, the 4 and 4S for those users. But newer devices offer advantages, said analyst Gerry Purdy of MobileTrax.

"The older models are getting away from the latest technology," he told us. "They are likely to incorporate the newer, LTE technology with a mini version of the iPhone."

Screen Shrinkage?

While the general trend in smartphones is toward bigger screens, Apple may well aim toward a scaled-down screen in order to reduce costs for the new iPhone, since displays are an expensive component and users abroad are less likely to use phones for videos and movies.

"They want to be able to deliver a less expensive product but also increase the profit margin," Purdy said.

Sources say Apple has a launch event planned for Sept. 10, although Apple has yet to confirm that. But archrival Samsung will be first to the gate on Sept. 4, with the expected launch of a Galaxy Note "phablet" and a smart watch rumored to be called Galaxy Gear.

Read more on: Apple, iPhone, Smartphone, Android, Rumors
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