Analyst sees $350 contract-free iPhone ‘4S’ model coming in September

“‘It’s time for a mid-range iPhone,’ analyst Chris Whitmore with Deutsche Bank declared in a note to investors on Monday. He believes Apple will offer a lower-end iPhone priced between $300 and $500 paired with a pre-paid voice offering,” Neil Hughes reports for AppleInsider.

“Whitmore noted that of the addressable market of 1.5 billion mobile customers worldwide, two-thirds of those are pre-paid users,” Hughes reports. “He sees a so-called ‘iPhone 4S,’ released alongside an anticipated fifth-generation iPhone, as a new category of device that would help Apple address that market.”

Hughes reports, “In February, The New York Times revealed that Apple has looked into building a cheaper iPhone, but rebutted reports from The Wall Street Journal and Bloomberg that claimed the company is planning to release a smaller model about half the size of the iPhone 4.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Lynn Weiler” for the heads up.]

26 Comments

    1. As soon as the next iPhone model is released, Apple will stop offering the $49 iPhone 3gs. Apple has to support a “new” iPhone during its two-year contract. I don’t think Apple wants to keep the iPhone 3gs going for another year and be obligated to make “iOS 7” compatible with anything less than an A4-powered device.

      1. Exactly. The only thing they need to change about the current iPhone 4 is to make it a dual GSM/CDMA model. I believe that the Verizon version already has the dual chip.

        1. Well, it would be disappointing if the next iPhone did not have an A5 inside, like iPad 2. And it would be very cool if Apple could go back to making just ONE phone design for the entire world.

  1. I already use an iPhone with pre-paid voice. As soon as iPhone 3gs owners with recently expired two-year contracts start upgrading to the next iPhone, there should be a “glut” on eBay. I’m hoping to get one of those as my “upgrade.”

  2. My sources are telling me that we will actually see no less than six new iPhone version released in early september. They will be named:

    iPhone 5 Starter, iPhone 5 Home Basic, iPhone 5 Home Premium, iPhone 5 Business, iPhone 5 Enterprise and iPhone 5 Ultimate

  3. When I use analyst magic 8 balls I always see myself as the “King of the World”. Then I look up and I am back to a mortal schmuck. Funny how that works

  4. A “low-end” phone that costs $350 is a non-starter. Apple will never do that…

    Also, Apple currently makes about $500 PROFIT per subsidized iPhone. An iPhone 4 (with or without an “S”) is still a VERY capable smart phone, even after the new iPhone is released (whereas iPhone 3gs is distinctly inferior to iPhone 4). WHY would Apple compete with itself by offering a non-subsidized product that retails for less than the pure profit on a subsidized iPhone? Apple does not want to take sales away from subsidized iPhones.

    I think Apple will offer something that is distinctly different from a “real” iPhone, yet will be highly desirable to its target audience. It will still be called “iPhone something,” just as an iPod shuffle is called “iPod” even through it is nothing like an iPod touch, and everyone knows it. No one who wants a “real” iPhone will buy this “iPhone something.” The target audience are the millions of customers who now buy low-end Nokia, LG, Motorola, and Samsung “feature” phones. This “iPhone something” will be the $49 (subsidized) replacement for the iPhone 3gs.

    With iPod, Apple started at the high end. Eventually, Apple went after the low end too. Who doesn’t believe that Apple will eventually go after the low-end of the mobile phone market? With Nokia struggling, that “eventually” is probably sooner, rather than later.

    1. Price sells. The iPhone has been around long enough that both Apple and AT&T have made a boat load of money. If Apple thinks they can continue to charge those rates for their iPhones, they will very soon discover Andriod is offering a cheaper lunch and in this new economy price sells.

      1. That “$500” is what Apple makes in profit (mostly from the subsidy payment from the carrier). The customer pays $199 up front, along with a two-year contract with carrier.

        Most customers want BETTER, not CHEAPER. That’s why Apple NEVER needs to do fire sales or two-for-one specials. And Apple sells every iPhone (and iPad) it makes, almost as fast as they can make them. There have been cheap Android phones out there for years, and “very soon” has not happened.

        And for folks who want “cheaper,” there is currently a $49 iPhone (with two-year contract). Apple still gets a full up-front subsidy payment from AT&T, but the up front cost to the customer is $49. Let’s see “Android” (which is not a brand BTW) offer a “cheaper lunch”…

        1. Google is not Microsoft but neither is it Apple. Cheap means lower cost at the expense of lower profit margins not lower quality. The $49.00 iPhone 3s is only available thru AT&T and only in Feb of 2011 was the iPhone sold thru Verizon.

          Meanwhile Android is sold by everyone. Here’s hopping Apple builds more factories and cuts their profit margins on the iPhones. This will certainly increase their sells.

          1. > The $49.00 iPhone 3s is only available thru AT&T

            That’s why I think Apple will eventually make a separate “$49” (with two-year contract) product that is NOT last year’s model. It will be designed and marketed to NOT compete with the highly profitable fully-subsidized iPhone. No one will confuse it for a “real” iPhone, just as no one buys an iPod nano thinking it’s an iPod touch. It will be targeted at customers who look at price before any other consideration; they are the ones who currently buy low-end Android phones, and “feature” phones from Nokia, LG, Samsung, etc.

        2. When you mention the $49 iphone as a cheaper phone, you seem to be overlooking the overal cost of the 2 year reqired contract.

          Those who want a prepaid phone want to be able to buy it free from any further obligation.

          I would like to see Apple enter this market. For many, a prepaid iPhone would be a stepping stone to full iPhone and other Appple products.

          I would welcome a situation where all iPhones are sold with universal chips, contract free. Let the carriers really compete for the business.

          1. How am I “overlooking” the two-year contract when I say “$49 iPhone (with two-year contract)”? 🙂

            Obviously, it costs more to own it that $49. That iPhone offering is for customers who look at the up front cost and don’t consider the total cost of ownership (and $199 just “seems” too expensive). It’s meant to counter those “cheap” Android phones sold with similar contract obligations.

            The current no-contract iPhone 4 costs $649

            http://store.apple.com/us/product/MC603LL/A?mco=MjI4NTM2NTM

            It costs that much because that’s how much of a difference the carrier subsidy makes in the up front price. So when you buy an iPhone for $199, the carrier is essentially giving you a two-year “loan” for the balance. (Even the older “$49” iPhone 3gs costs $449 without contract.)

            My point is that Apple is NOT going to offer an iPhone (even an older design) with no contract for $350. That would be stupid, because that would take away sales from the carrier-subsidized iPhone, where the profit per unit is MUCH greater. Instead, I think Apple will go after the portion of the mobile phone market that currently does not consider iPhone as a choice, for the reasons you mentioned. It will also be the next $49 subsidize “iPhone.” That product will be called “iPhone (something),” but Apple will carefully design and market it to be distinctively different, just as no one confuses an iPod nano for an iPod touch. It will not take away sales from the “real” iPhone.

  5. I’ve mentioned this before and elsewhere. Apple tells us to “think different.” They will introduce an iPod touch that allows phone calls with a prepaid card.

    It’s two entirely different markets.

    The new product? The iPod Touch Phone.

    For people who don’t really need and will never buy a regular iPhone but are looking for a new iPod.

    iPod sales will then skyrocket again.

  6. With the iPad I use the browser less on the iPhone and could see an iPhonewith a smaller form that runs apps but lacks a browser. Call it a Bono or a mini or whatever. Could be a massive market.

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