All signs indicate that Apple (NASDAQ:
) is finally developing a lower-cost iPhone that will
reduce the contract-free price
by as much as 50 percent. According to ETrade Supply, Apple has
confirmed that a lower-priced iPhone is being developed.
"When something is happening in the cell phone business, we
here at ETrade Supply are often the first to know," ETrade Supply
in a news post. "You may remember 11 months ago, we showed you
the first real images of the iPhone 5, or three months ago the
first parts from the Blackberry (NASDAQ:
) Z10. Well, we just heard 'on the wind' confirmation that Apple
will in fact be releasing lower-end models."
How could ETrade Supply be privy to information that no one
else has? According to the company's website, ETrade Supply is a
"global, vertically integrated, post sales consumer electronics
solutions provider." The company "maintains facilities dedicated
to OEM new, OEM reclaimed, and contract production of consumer
electronics repair parts."
This is not the first time that a low-cost iPhone was said to
have been confirmed by Apple.
In January, tech bloggers had a field day after a Reuters
pulled a story (in which Phil Schiller, Apple's Senior VP of
Worldwide Marketing, claimed that Apple would not develop a cheap
from its website
. This made it appear that Apple was developing a lower-cost
While the Mac maker was also believed to be building an iPhone
Mini, the company is now reportedly focused on reducing costs for
the existing iPhone format. This means that the screen size,
resolution and processor speed may be very similar to what
consumers already receive when buying the current-generation
iPhone. Other features -- such as the body, the way parts are
laid out internally, the weight and thickness of the device, etc.
-- will be tweaked to make up the difference.
With a rumored price point of $350 to $400, the cheap iPhone
could still be very expensive. However, it would be notably
cheaper than the iPhone 5, which carries a starting price of
According to IHS iSuppli, Apple can
produce that model for $207
-- just $19 more than the iPhone 4S.
This cost is relatively low considering the high price point.
It is even lower when investors read all the reports about how
difficult the iPhone 5 was to manufacture. While that may be
true, the increased difficulty only added $19 to the expense.
If Apple intends to sell a new iPhone (of any type) for $400
or less, the company may aim to cut production costs by roughly
$80 to $100. That could be difficult even if cheaper parts are
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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