Is Apple (NASDAQ:
) building a cheaper iPhone? Consumers will be the last to know,
as company policy is to avoid commenting on virtually every rumor
that circulates the Web. Topeka Capital analyst Brian White
thinks he already knows the answer.
In a research note obtained by
, White said that his team discovered multiple iPhones in
"different screen sizes" for a potential launch in May or June
2013. This should allow Apple to "better bifurcate the market and
pave the way for a lower-priced iPhone," White said.
With regard to the device name, White estimates the obvious.
He believes that Apple will maintain the naming scheme of its
iPad and refer to the handset as an "iPhone Mini," or copy the
MacBook line and call it an "iPhone Air."
"We believe a $250 to $300 price point for a lower-priced
iPhone would make sense and 58% below the $649 price point for an
unlocked 16GB iPhone 5," said White. "A $250-$300 price range
would also be competitive with China-based Xiaomi that offers a
high-end phone experience at a mid- range price of ~$320 in
White estimates that Apple was unable to address at least 60
percent of the smartphone market in 2012 -- mainly because the
iPhone is simply too expensive. He believes that the industry's
growth spurt will primarily occur outside of the high-end market,
thus making the iPhone Mini concept much more appealing to
The device could almost be compared to an iPod Touch, as White
expects Apple to use colors to "excite consumers." (Apple may
also new use colors to hide the fact that is using cheaper
In January, Apple marketing executive Phil Schiller said that
Apple would not build a cheaper iPhone. At the time, his comments
seemed to be a defensive maneuver designed to uphold Apple's
upscale appeal. While it is acceptable for Apple to developer
smaller, lower-cost items -- such as the iPad Mini -- the company
does not want any of its products to be thought of as being
However, Apple helped thicken the plot when it
recalled the story
, indicating that the Mac maker will produce a cheap iPhone.
By taking this path, Apple faces the same challenges that it
did when introducing the iPad Mini. First it must deal with the
fact that consumers may not want a smaller device. Millions of
them purchased the iPhone 5 because it was slightly larger than
the previous iterations.
Do consumers really want a handset that is smaller than the
Second, there is the very real risk that consumers will shift
to the cheaper option and leave the full-size iPhone behind. This
seems to be the case with the iPad Mini, which might explain why
Apple reports combined sales of each iPad model instead of the
Third, it could dilute the brand. Right now, Apple products
are viewed as top-of-the-line luxury items that people can't live
without. It maintained that status with the iPad Mini by charging
$329 for the device -- a mere $170 less than the full-size model,
and only $70 cheaper than the iPad 2.
Consumers did not care that the smaller tablet had cheaper
components, a smaller screen and a lower resolution. They simply
wanted a compact iPad and appreciated the lower price.
If Apple takes a similar path with the iPhone Mini, it likely
won't have a Retina Display, and will probably cost a bit more
than the $250 - $300 price tag that White anticipates.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Gain access to more investing ideas, tools & education.
Get Started on Marketfy, the first ever curated
& verified Marketplace for everything trading.