Without iPhone exclusive, China Unicom now turns to low-cost handsets

china unicom

There is a surge of demand for low-cost smartphones in China. Latest to ride the wave: local carrier China Unicom, which lost its exclusive deal to sell iPhones in 2012.

Apparently, the shift toward inexpensive phones is paying off, the company reporting a 55 percent jump in profits for the first half of 2013.

While there is still room for high-end smartphones, vast growth is seen selling inexpensive handsets to emerging markets, such as China and India. Apple could unveil a plastic iPhone aimed at first-time smartphone owners and still make “decent profitability” one analyst said Thursday…

Apple can sell the basic smartphone for $450-$550 and retain “decent profitability, but at the cost of volume,” KGI Securities analyst Ming-Chi Kuo said, according to AppleInsider.

The report comes as Apple CEO Tim Cook recently finished yet another trip to China in hopes of enticing China Mobile, the world’s largest carrier. Some carriers have balked at selling the iPhone, given its expensive cost for customers and high subsidies which wireless providers pay.

To combat such concerns, Apple has tested time-payment plans, and so far has not flatly denied it will offer a cheap iPhone in September. Some observers believe such a device would have a polycarbonate body like the iPhone 3GS.

Such a design could reduce production expenses for Apple, while also reducing the end cost for consumers. However, the iPhone maker (and investors) will need to learn how to live with leaner profits due to slimmer margins of a more affordable iPhone.