Bloomberg: Apple developing cheaper, smaller iPhone for 2013 holiday release

“Apple Inc. plans to sell a smaller, cheaper version of the iPhone as soon as this year, said a person familiar with the plans, part of a push to gain customers in developing nations,” Olga Kharif and Adam Satariano report for Bloomberg News.

“Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest, according to the person, who asked not to be named because the negotiations are private,” Kharif and Satariano report. “Apple has spoken to at least one of the top U.S. wireless carriers about its plans, the person said yesterday.”

MacDailyNews Take: If true – and with the WSJ and Bloomberg now on the case, it’s likely (the laggard NY Slimes should be along eventually) – Google’s one claim to fame, profitless unit share, is about to go “Poof!” And, you can bet that if Apple enters the pre-paid phone market in emerging markets, they most certainly will have margins and they will make a profit on each device sold.

Kharif and Satariano report, “Executives at Apple have been particularly interested in building a lower-cost model with less-expensive components as a way to appeal to customers in emerging markets, another person has said… The device would use cheaper parts and may be smaller than current models, people familiar with the plans said. Apple was also considering a more versatile version that would work on multiple wireless networks, according to people who were briefed on the plans.”

Read more in the full article here.

MacDailyNews Take: The trick – and it’s not too difficult – will be for Apple to make a pre-paid iPhone model that will delight customers in emerging markets, but not entice many current iPhone users.

Apple can do this by delineating the models based on screen sizes and, to a lesser extent, resolution (Retina displays) and/or features (for example: Siri).

Imagine a modern day 3.5-inch iPhone 3GS (with a faster processor, better battery, thinner screen, thinner and lighter body) as the pre-paid iPhone and an iPhone family for carrier-subsidized markets that features screens from 4-inches and larger with Retina displays, state-of-the-art cases (Liquidmetal?), Siri, etc. There would be little cannibalization to worry about with such a clear-cut delineation between flagship iPhones (“iPhone Pro”) and pre-paid models (“iPhone Mini” – don’t call it “iPhone Air,” that would give it too much cachet).

Related articles:
WSJ: Apple prepping less-expensive iPhone – January 8, 2013
Apple to launch low-cost iPhone with 5-inch display for emerging markets in 2H13, sources say – January 8, 2013
Barclays: Cheaper iPhone for emerging markets ‘key’ for Apple – December 4, 2012

20 Comments

  1. My source, who asked not to be named, said these are pure rumors and no low cost phone is in the works.

    This would be like Porsche making a car to sell for less than 15,000 USD. Assuming this scenario how much value do the premium Porsche products lose? I’m sure the loss is much greater than the gain and why Apple will not pursue a race to the bottom.

  2. I have a 64gb ipod touch, for me there is really no need to purchase a full price iphone (4, 4s or 5) for what I would use it for. Currently use a crappy nokia feature phone, hate everything about it except the size, 4″ high x 2.3″ wide, which is perfect for me. If Apple produced a touchscreen phone this size with a new, separate version of iOS and a few apps like itunes, mail, etc. imo it would be a huge success. Main reason I have not purchased a cheaper android phone is I know they will never get updates, Apple would do updates and many people would appreciate it, and being in the apple ecosystem some/most will upgrade to the flagship phones. Makes Perfect sense to me, no different than having to choose between an iPod mini/nano and an iPod Touch. I would pay 300 dollars for the phone I describe.

  3. iPhone nano…

    1. 3″ non-retina display. the screen needs to be just big enough for a keyboard.

    2. Design similar to the iPod nano and come in different colors.

    3. Will run an embedded version of iOS, but will not have access to the AppStore.

    4. Will originally come with a fixed set of apps with the possibility of its own app store in the future.

    5. Will not get OS updates – except maintenance updates.

    6. Will support iTunes music, videos, etc.

    7. Limited iCloud support: data backup only.

    8. Radios: Bluetooth 4.0, GSM, maybe WiFi, No GPS

    9. Other hardware: Lightning, A4, 8GB, maybe a camera.

    The iPod nano is redesigned to match these specs.

    iPhone nano, $149
    iPod nano, $99

    1. …or Apple could just lower their profit margins or just use the iPhone 3S or 4 as the low entry point. Apple and their manufactures/supply chains have far too much invested in their current designs to re-tool for a new less expensive hardware design.

      1. There needs to be a huge incentives to move up the product line. Apple doesn’t wasn’t high volume sales of the iPhone nano to last. It wants a stepping stone to pull people into the iOS ecosystem.

        The business plan would be to get people in “emerging” markets to think of Apple products. Possibly use the nano for a while, then when they see what the experience is like and what the benefits may be, get them to buy a regular iPhone.

        Apple isn’t in the low margin, high volume game. They have dipped into the lower end of markets but only as a means to pull those people into the high end. The plan for an iPhone nano would be the same. Which is why it would have to be a device with many limitations.

        Apple does not have “far too much invested” in their designs; the iPhone 4 design has been around for two and a half years – they’ve gotten all they need out of it and then some.

        Tim Cook is a genius at making sure they get the most out of their supply chains. And that’s why I believe the iPhone nano and iPod nano will support the same design and feature set. Same components going into products for different markets.

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