Will Apple Bait-and-Switch a Cheap iPhone?


Apple (NASDAQ: AAPL ) has reportedly said that it will not develop a cheap iPhone. Instead, the company is expected to build a low-cost iPhone and promote it as a more affordable alternative to the existing models. This would theoretically allow Apple to avoid the negative connotations that come with developing a "cheap" product.

According to DigiTimes , Apple may choose to release its low-cost iPhone in limited quantities this summer.

Companies within the iPhone's Taiwanese supply chain are speculating that this model will target emerging markets with an initial shipment of jut 2.5 million to three million units.

With few units available, consumers may scramble to get their hands on the device, which is expected to come with a "cost-effective" plastic chassis, a four-inch display and an A6 processor.

If this were the latest and greatest iPhone, empty-handed consumers would simply wait for the next shipment or order the device online.

This is not the next iPhone, however -- it appears to be a cheaper, revised version of the current model. If consumers can't buy it but are offered the chance to get an even faster iPhone for $X more, they might be tempted to cough up the cash.

That could be Apple's ultimate goal. While Samsung is unashamed about its tactic to flood the market with as many units/models as possible, Apple prefers to implement a more surreptitious strategy .

It worked quite well for the second-generation iPad. When it arrived at retail, Apple initially shipped and sold a very limited number of units.

Before shipment times finally improved , rumors suggested that the company may have purposely dispersed new units after they arrived at each Apple Store. Instead of selling them all at once on a first-come, first-serve basis, the company was thought to have sold only a few units per day in order to keep customers coming back. This also created the illusion that Apple received new shipments every morning.

Whether or not this was true, only Apple and its employees know for sure.

In any case, Apple has not experienced any massive shortages -- intentional or not -- since the iPad 2 was released two years ago.

While the supply chain had warned that the iPhone 5 could be hard to find , most consumers got what they wanted when the device was first released.

Thus, Apple may have no intention of shipping a limited number of low-cost iPhones this summer. If it does, it will be interesting to see how customers react to a shortage of the cheapest iPhone ever produced.

Will they wait for more units to arrive, or will they cave and purchase a slightly more expensive model because Apple already lured them into the store?

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 @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: AAPL


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