Why a low-cost Apple iPhone would trigger chaos in the smartphone market

“The buzz around the budget iPhone has grown deafening, with new reports about the device coming out on a weekly basis,” Tero Kuittinen writes for BGR. “This will be a product launch with a unique impact because of two trends that define the current smartphone market.”

“First, the overall smartphone volume growth is projected to slow down from more than 50% in the fourth quarter of 2012 to about 36% in Q4 2013,” Kuittinen writes. “Second, the Q4 2012 growth rates of the three biggest Asian smartphone vendors have remained superheated, with Samsung (005930) at 76%, Huawei at 89% and Sony at 56%. What made this was possible was Apple’s slowdown to 29% growth during the past Christmas season and the notably weak year-on-year numbers from Nokia, ZTE and BlackBerry.”

Kuittinen writes, “If the budget iPhone really arrives this summer, it will drop smack in the middle of the tension created by slowing global smartphone volume growth and the extremely ambitious volume growth targets of the largest Asian vendors… [A] budget iPhone would completely reshape the Christmas season market share outlook, possibly spelling doom for a variety of mid-tier brands from HTC to LG.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

25 Comments

  1. Now is not the time for a budget iPhone, it’s time to push the height of mobile innovation even further towards the sky. Apple doesn’t need a cheaper iPhone, they need something that makes the iPhone 5 look like a cheaper iPhone.

    Budget iPhone = out of ideas, out of innovation and unfortunately it may mean Apple is almost out of time.

    1. Let’s not obsess over initial purchase price. Buyers actually do consider other things, at least if those benefits are pointed out to them with effective advertising.

      I think there’s room in the market for BOTH a slim/limited 3″ screen iPhone Mini and a more expensive 4.5″ screen flagship iPhone Pro.

      … after all, Mac laptops are offered in multiple flavors with substantially different capabilities and no one here argues about the price points.

      1. I’m not obsessing over the price point, I’m obsessing over the fact that it will not be the best phone Apple can produce. According to the rumored specs, it will have a cheap case, cheap screen and probably a cheap processor. Who knows what else will have to be skimped on in order to reach that price point. I’m not a snob who frets about Apple appealing to the poor; it’s not the price point, it’s what must be sacrificed to reach it.

        And nobody complains about MacBooks because they’re all extremely high quality machines unmatched by their competitors. If Apple starts making a $499 MacBook Broke constructed like a cheap plastic Dell with a low quality screen, you can bet your ass I’ll be complaining.

        1. Well, let’s not just assume the rumors are true. Most aren’t.

          I am confident that Apple will release a superior iPhone this year. What I can’t understand is why Apple doesn’t already offer a family of iPhones to serve a very diverse global market.

          1. Right on Mike. If they had a large form factor iPhone and the smaller more affordable iPhone for the emerging markets available now, the stock would still be at $700 or more. No problem. If this were not true Apple wouldn’t be trying to bring these things to market as fast as possible. And they are. And they will. And once they do all the naysayers will be proven wrong. It’s as simple as that. And they’ll sell like hotcakes!

  2. More tweaking and catching up with the competition. It won’t make any difference – too little, too late. An unfortunate Apple Inc. pattern under the hapless, clueless Tim Cook.

    1. I miss those days when you backed up your criticism with some relevant facts or data. When I criticise Apple, it’s with the intent to spur the company to improve and fix its weaknesses.

      It seems you’re not here to provide constructive criticism. So why do you bother?

      1. Good question, Mike. And I appreciate getting a response from someone around here that is not name calling or trashing me just because I don’t come here for the sole purpose of praising Apple – especially these days when there is so little to praise.

        My criticism is aimed at Tim Cook because I believe responsibility for the company’s performance – or lack of performance as is the case these days – is that of the CEO. It’s been that way since the dawn of Capitalism. Whether it is fair or not, or whether the CEO is a good guy or not, it’s his responsibility to lead the company to continuing success through innovation, marketing, response to consumer need or desire, or – as it used to be with this company – breakthroughs in exciting new products that really impact consumers, drive and lead the market. Tim has NEVER done that and it’s time for him to go. It’s why AAPL has collapsed and why the company is at a virtual standstill. Apple is crying out for new leadership. It’s the ONLY thing that matters right now.

          1. I don’t know who should replace Tim Cook, Racer… it’s the job of the Apple Inc.’s directors to put a CEO in place who can lead the company. They’ve done a wonderful of wasting vast sums of money on Al Gore’s obsession with the myth of “global warming” and now they need to find a Steve Jobs replacement worthy of his legacy.

          2. It looks like everybody is playing into the ANALyst game. Most CEO’s get 5 year to do their work unless there is a major screw-up. Tim hasn’t done one of those.

            1. Exactly the problem. How can Tim make a major mistake if he doesn’t do anything?

              In your mind, have the recent executive hires and product launches gone swimmingly? Stale products are receiving timely updates? Your Maps is flawless?

              Only a blind person would find no room for improvement in Apple leadership. If the world community had confidence in Cook, stock price would have recovered long ago. But the world is not willing to wait forever for Apple to regain its former quality and pace of exciting new product intros.

        1. Theres nothing wrong with Apple, pp.

          I think in your imagination, Apple is supposed to be selling unicorns or something. Apple is on-track with their product releases and updates as they have ever been.

          Remember the first iPhone? How many apps could you buy at the App Store? Zero. What about “antenna gate?” Steve Jobs was not immune to product releases nor is Tim Cook.

          Take a reality class and then come back.

  3. There is a huge market for sugar water (Coke) and Apple needs to get into this market too. They are really behind in market share in this market and need to do something soon or they are doomed.

  4. Well, since most Samsung *shipment estimates* would equate to BOGOF sales, that 76% growth rate would equate to a 38% actual sales growth rate, wouldn’t it?

  5. Apple mainly needs to work out what are the most important features that consumers are looking for in any smartphone and build a smartphone that perfectly fits 90% of their needs. Apple being expected to earn close to 50% profit margins on an innovative smartphone are downright unreasonable and you people should realize that much. A China-special smartphone has to have a reasonable price for Chinese consumers at least in line with their salaries if such can be determined.

    I find it absurd not to offer a Retina display to the Chinese consumer but I can’t conceivably come up with a way to cut corners in other areas of construction in order to hold such unreasonable profit margin expectations. It’s just not fair for Apple to have to be held to impossible expectations in hardware. Is it even possible to have that sort of economy of scale for a device being built for a nation of near-poverty? Apple would have to pull off some sort of minor miracle, if you ask me. Apple is being damned either way for selling a high-cost China smartphone or a low-cost China smartphone. Why, I’m not sure. Somehow, it will have to be priced to perfection, if that’s even possible.

    This is why I want to see Apple start moving away from the hardware business and constantly needing to rely on smartphone margins to maintain profits. A search engine and/or cloud services just seem more likely to keep a steady revenue flow and both can be handled by huge, multiple server farms around the planet. Global satellite links and undersea cable where necessary to glue them all together. Apple has the cash on hand to accomplish these things and the sooner they start working on this, the better.

    1. Yes, Apple will ditch hardware and switch to search and cloud because there is revenue there. They are not interested in making great products, just in making money. Great point.

  6. Right: an iPhone for free with free shipping! So what are these ridiculous articles trying say, anyway? How much cheaper can you get? Obviously there’s something else going on here, and it has nothing to do with price. What these articles are trying to get Apple to do is become a ‘bottom feeder’, just like Samsung. Like throwing iPhones free in boxes of Cheerios, making them plasticky and selling them at Dunkin Donuts. Until that time comes, Apple is “way too expensive”. Give me a break…

  7. Just get onto China mobile and get it together in India.
    Keep all three existing iPhones and Offer the next on also
    Sell four of them.
    Hell the 3gs was a good phone and plastic without retina display. I’m not saying bring is back, Im saying do some colors with the iPhone 4 and drop the prices on the 4s and 5. Introduce a kick ass 6 and make it premium.

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