Analyst: Apple would be ‘stupid’ not to release budget iPhone

By , Mar 14, 2013

iPhone 5 presser (Phil Schiller, iPhone family prices)

Many analysts have voiced their support for a rumored less-pricey iPhone which  they hope will help Apple recover from market share losses in emerging markets, namely China, India, Brazil and Russia – all huge markets for handsets. BTIG’s Walter Piecyk goes further, calling Apple “stupid” if it doesn’t release said device before year’s end.

By his own estimates, Apple could sell about 36.5 million less-pricey iPhones in fiscal 2014 for an additional $11 billion in revenue – and that’s after accounting for some inevitable cannibalization of the higher-priced iPhone models…

Your money quote comes via AllThingsD:

We believe a product that addresses the more than 70 percent of global wireless subscribers that are unsubsidized pre-paid is necessary in order for Apple to grow its EPS next year. This is not rocket science and our belief is based on basic logic, not questionable ‘channel checks’ or trips to Asia.

Commercial Times last week reported that prototype budget iPhone units “in several colors” had been spotted in the wild. Some people speculate the device has a polycarbonate body akin to the phased-out white plastic MacBook because Apple wants to minimize costs.

I said it before and I’ll say it again: the budget iPhone is inevitable.

Apple didn’t even blink when it killed the iPod mini to replace it with the nano. The iPod lineup is now very diversified, covering price points from as low as $49 all the way up to $399.

Why not diversify the iPhone then?

The high-end of the market, Apple’s domain, is drying up and even Apple’s marketing head Phil Schiller has acknowledged that Android is leading the market because carriers lure feature phone owners with free Android handsets.

Conveniently on the eve of today’s Galaxy S4 launch, Schiller sat down with The Wall Street Journal to call Android “a free replacement for a feature phone”. He also quoted Apple’s own research which apparently shows that four times as many iPhone users switched from Android than to Android during the fourth quarter of 2012.

Why then pass on the opportunity to engineer a more affordable feature phone replacement?

iPhone 4 unlocked
Apple’s least expensive contract-free iPhone? The $450 iPhone 4, which is nearly three years old

Right now, Apple’s iPhone sales are still growing. The iPhone 4S and 5 are the world’s two most popular handsets. The firm is beating Samsung in the United States with a 51 percent smartphone share as Android lost some ground in the world’s leading market for handsets.

Elsewhere, it’s a different story.

Apple’s share in emerging markets is dismal and in a single-digit range because people in countries like China buy phones off-contract, and with Apple’s cheapest contract-free $450 iPhone 4 fetching north of $700 in these territories.

There’s only that much to be made from deep-pocketed cell phone users and Apple would be wise to offer a contract-free sub-$300 device instead of letting cheap Androids take first-time smartphone owners’ money.

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  • Daniel Ehrlich

    I never understood the argument in favor of a budget iPhone…. Whenever a new iPhone is announced/released, previous models, as far as two cycles back, are discounted and become incredibly affordable. This works out better for the consumer because they’re getting a premium quality phone (presumably better quality than a ‘budget’ phone) for less money. I don’t get it…

    • smtp25

      The iPhone4 8GB is still $US450 no-contract which really isn’t that budget compared with some decent Androids/smart phones

      • http://www.facebook.com/profile.php?id=1600159663 Glorin Chiourea

        but at least its running well… and even gets iOS6

  • Guest

    The Analyst is actually the stupid one here, he is probably some of these guys who didn’t find a real job and therefore talk shit all the time in the hope people believe it.

    • TesticularFortitude

      Agreed. Maybe Bugatti is stupid, too. They haven’t released a budget sports car to compete with the mustang. lol

      • http://twitter.com/MLGJeanmarc JeanMarc

        Great point lol

      • Tr1pTr0p

        Yes, technically, they are “stupid”, because they’re missing out on a hell of a lot of potential customers. (Read: profit.)

      • Guest

        You again, I thought you’d have left this Blog.

        If you don’t recall: Apple (and Bugatti) are creating products for the higher class, using their products is kinda a Status-Symbol saying “Yea, I am better than others”, but if there’s a Budget Version which anyone can buy, then you are not “better” anymore. Less sales of the “real” devices = no profit.

      • Tr1pTr0p

        Left? Nope. Still an Apple user, still here.
        I’ve met some really bat shit crazy fanboys out there, but by saying Apple’s devices are for the higher class, and are some sort of a status symbol… You just raised the bar. Congratulations.
        More affordable products makes your product available to a wider audience, which automatically raises chances that more people buy it, which results in what? Say it with me… That’s right! More profit!

      • Guest

        Congrats, you are still the same idiot as before.

      • http://twitter.com/JarrydRichards Jarryd Richards

        Haha. Just like Bang & Olusfen are “stupid” for not having loudspeakers that cost less than $20,000 that will appeal to the general public.

  • Qiren_94

    Since when do analysts say anything other than bullshit?

    • TesticularFortitude

      Remember they pleaded for a smaller, lower costing iPad? Apple released the mini, then they roasted the stocks for making smaller margins on it.

  • Mdjg

    “Apple’s share in emerging markets is dismal and in a single-digit range because people in countries like China buy phones off-contract, and with Apple’s cheapest contract-free $450 iPhone 4 fetching north of $700 in these territories.”

    I don’t like the idea of a budget iPhone, and although it is true that in countries like China they do buy out of contract phones, I feel like a budget iPhone will not necessarily help with sales. For Example, if they offer this “budget” iPhone for $300 out of contract here in the states, there is gonna be a huge demand for it and will end up costing nearly as much as the $450 iPhone is fetching now in those countries. So really there would be no difference other than the fact they will be buying a “cheaper” iPhone at about the same price. I suppose they will have the “latest” apple product, but I’m sure the specs would be toned down for the sake of costs. If anything, I feel like the only people this would make happy would be analyst, but only for a while, eventually they’ll all talk about how budget iPhone sales are cannibalizing regular iPhone sales, and in the end Apple will still be stupid. Apple’s end game is profit though, so either way, I guess they would end up with what they want.

    • Daniel Ehrlich

      It’s called cannibalization.

      • Mdjg

        so the act of cannibalization would not be cannibalizing?

  • http://twitter.com/MLGJeanmarc JeanMarc

    This post again
    The analyst are stupid
    They make stupid stuff up

  • M Last

    Apple never release budget iphone
    don’t be stupid & think about ipod touch $299

  • http://www.facebook.com/joe.jonsen Joe Jonsen

    I think this story is IDB’s crack.. they post this silly story 5 times a week and probably get high off it…lolol

    • triggerfiend

      ..Amen!!!

  • Paul Drew

    Like Rolls Royce should produce a budget car? I don’t think so!

    • Kurt

      hahaha apple is far from rolls royce status

  • benjamin aguilar

    iphone 1rst generation design, slimmer etc …