Pegatron CEO: Apple’s ‘low-cost iPhone’ won’t be cheap

“Speaking at his company’s shareholders meeting on Thursday, Pegatron CEO T.H. Tung said Apple’s much rumored low cost iPhone won’t be a budget offering,” AppleInsider reports.

“Tung disagreed with rumors that called Apple’s lower-end offering’ cheap,’ saying the ‘price is still high,’ reports the China Times,” AppleInsider reports. “The executive said products currently on the market can carry a number of names, but ‘cheap’ is not one that should be associated with Apple’s less expensive iPhone.”

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AppleInsider reports, “The statements appear to confirm previous reports that Pegatron is handling at least a portion of the as-yet-unannounced iPhone’s manufacture. A report in May claimed Pegatron is reportedly preparing to hire some 40,000 workers sometime in the second half of 2013, adding fuel to the low-cost iPhone fire.”

Read more, and see 3D renderings of the so-called “iPhone Lite,” in the full article here.

MacDailyNews Take: As we wrote back on January 9th: “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.”

Related articles:
Pegatron to start shipments of low-cost iPhone, next-generation iPad mini in August, sources say – June 14, 2013
Purported rear casing for Apple’s low-cost iPhone shows curved design, Lightning port (with photo) – June 3, 2013
Morgan Stanley: Low-cost iPhone raises, not lowers, Apple’s gross margins – June 3, 2013
Analyst: iPhone 5S and new low-cost iPhone expected to debut in early September – April 25, 2013
Apple patent application describes ceramic housing that could be used for low-cost iPhone – March 28, 2013
Low-cost iPhone could generate billions for Apple – February 19, 2013

16 Comments

  1. Nobody who knows anything about Apple would have expected otherwise.

    Apple always maintains a decent profit margin and therefore compared to alternatives with razor thin margins, a lower cost iPhone would not appear to be cheap, but the build quality, the operating system and the ecosystem would make it a very attractive product with a sensible price tag.

  2. Philip Schiller directly denied that Apple will do “cheap” phone. He pointed out that the denial is exactly about cheap phones, not about “inexpensive” phones.

  3. There is some space in the “two generations back” area (for example, with iPhone 5 being the last one, and 4S previous, the iPhone 4 would fit in that space). Rather than selling a two-year old model as a new phone for $450 ($free with subsidy), Apple might decide to move in with a brand new model that would fit this space. More than likely, the feature set would be very similar to that old iPhone 4, but since it is newly designed, it would be much more appealing to consumers. Many people don’t want to buy a two-year old model, if they can get a most recent one for the same money. This is where Android gets to score some points with the uninformed consumers — the cheap new models appear more attractive than the now 3-year old iPhone 4.

    1. Since the upcoming iPhone will be a 5s, the iPhone that is 2 generations old will be a 4s.  Also, Apple recently lost a patent case relating to the iPhone 4 that will require it to pull the 4 from the market.  So I agree with your observations … but expect the budget iPhone to be based on the 4s rather than the 4.

      If it does that, Apple will no longer have a reason to offer the 4s.  Its lineup would be 5s, 5 and the new budget model.

      Nine months ago, materials in the 4s cost Apple about $132 with another $8 in assembly costs.  The 4 was about $20 cheaper because component costs decline as the model ages.  So a 4s-based budget model this fall could be manufactured for about $120/unit. That doesn’t include development costs — which should be pretty low — and corporate overhead.  However, it suggests that Apple would earn a pretty good profit with the budget model priced in the $299-$349 range (retail, no carrier subsidy).

      1. Your price range seems way too low. I will be very surprised if this new value iPhone retailed for less than $400. If its purpose is what you seem to agree on, to displace the two-generations-old model (today, it is 4), then its price will likely start around the same point. iPhone 4 currently sells for $450.

  4. Here we go again, another CEO that supposedly spills the beans on one of his clients. Mr. Tung will of course refute this story within 24 hours.

    Why do we put up with this kind of crap? Some journalist makes a chicken out of a feather and the rumor sites all go berserk link baiting.

  5. THIS WON’T MATTER, PEOPLE. When will you ever realize that what Apple is doing under Tim’s “leadership” is firmly entrenching the once great, innovative company among the ranks of ordinary. Apple is Sony. Apple is IBM. Just with fewer products. AAPL proves this reality. Go ahead, buy some. Then get ready to weep. Oh, and buy a pink phone – that’ll make you feel better.

  6. I don’t believe this.
    So essentially the Pegatron CEO is talking about a costumer that does not like to be talked about. He is talking about a product that has not yet been announces or confirmed and all this reportedly after managing to secure some business from Apple… I highly doubt it. If so, they will probably never get any more business from Apple…

    And besides. I really hope this is not true… We already got a cheap iPhone today in the iPhone 4S and an even cheaper iPhone in the iPhone 4. We don’t need another one.

    But if its true. I really hope not. He is right. It will be like the iPad mini. It’s not a cheap phone, its a lower prices iPhone. And people and the market will again be EXTREMELY DISSAPONIED because its not $99…

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