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Apple (AAPL) is working on a cheaper iPhone that could launch later this year, the WSJ reports....

Apple (AAPL) is working on a cheaper iPhone that could launch later this year, the WSJ reports. One source says the device could resemble the regular iPhone, but "with a different, less-expensive body." The cheapest iPhone currently sold (the 8GB iPhone 4) goes for $450 unlocked, putting it out of the reach of many emerging markets buyers, as well as some prepaid buyers in developed markets. The fact low-end Android phones sell for much less (sometimes less than $150 unlocked) has done wonders for Android's international share.
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Comments (59)
  • George Kesarios
    , contributor
    Comments (764) | Send Message
     
    I said it 2 days ago and I got bashed!!

     

    http://bit.ly/UUEmuS
    8 Jan 2013, 05:22 PM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    You did indeed. Jobs is dead and they really are dumping his legacy overboard just as fast as they can.
    8 Jan 2013, 05:54 PM Reply Like
  • MAdeelA
    , contributor
    Comments (62) | Send Message
     
    I don't understand why all the AAPL haters are getting so excited.

     

    APPL offered their bread and butter iPod at all price points to compete in the MP3 player market.

     

    Even the MacBook Pro which used to retail at astronomical levels have eventually come down to competitive price point.

     

    The cheap iPhone will be specced like the iPhone 3G(maybe 3GS) and could retail for $249 unlocked. Still a higher price than the competing Andriod. Just like the iPad mini.

     

    Customers who want the latest and greatest will still get the iPhone 5. This is definately not catered to that user market. People who go out to buy a BMW don't come home with a Corolla.
    8 Jan 2013, 07:37 PM Reply Like
  • AllesandroG
    , contributor
    Comments (19) | Send Message
     
    For emerging markets only, I would hope.

     

    This from StreetInsider today (1/8/13):
    " Earlier reports had Apple, Inc. (Nasdaq: AAPL) working on a lower-cost iPhone to tap further into emerging markets. The WSJ affirmed speculation with its own headlines after the close of the market. Despite Apple still having strong sales with its bread-and-butter offerings, the company may be looking to make adjustments as it aims to keep growth on track. Whether margins on the rumored iPhones end up being comparable to current levels is pure speculation; there are plenty of components out on the market that would do a good job of mimicking the Apple experience, but Apple ultimately has to decide if sacrificing quality is in the game plan."
    9 Jan 2013, 12:48 AM Reply Like
  • goofydon
    , contributor
    Comments (228) | Send Message
     
    I hope Apple leaves the $150. smart phone market to Samsung, HTC and Nokia.

     

    RIMM is on a fast train to nowhere and Microsoft has a very large mountain to climb (I don't think Ballmer is up for the challenge). .
    8 Jan 2013, 05:25 PM Reply Like
  • Jack Baker
    , contributor
    Comments (895) | Send Message
     
    I think it's OK if it's only sold in developing countries. Not sure what it would do to the brand in the U.S. Part of me thinks it would hurt the brand. The other part of me thinks that it will get people on the lower end of the socioeconomic ladder to get into the AAPL ecosystem earlier and not have to convert over to AAPL after using an andriod phone first. But, then there are the margins....
    8 Jan 2013, 05:27 PM Reply Like
  • apple_investor
    , contributor
    Comments (193) | Send Message
     
    It'll be offered only as a 3G phone. The high end iPhones will be 4G. That will effectively separate the developed world from the rest of world.
    8 Jan 2013, 09:57 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    Take a guess, China has 3G or 4G?
    8 Jan 2013, 10:40 PM Reply Like
  • croatkid1
    , contributor
    Comments (205) | Send Message
     
    Not a guess - the more advanced areas have 3G

     

    which is why AAPL Tim Cook is in China now to negotiate with China Mobile (CHL)
    8 Jan 2013, 11:16 PM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    LOL.
    8 Jan 2013, 05:28 PM Reply Like
  • oregondean
    , contributor
    Comments (104) | Send Message
     
    "The fact low-end Android phones sell for much less (sometimes less than $150 unlocked) has done wonders for Android's international share" ... and has done nothing for the International profit margins of the hardware suppliers supporting the Android platform.

     

    Question - is it better to have the largest unit market share or the largest cash profit margin dollars?
    8 Jan 2013, 05:36 PM Reply Like
  • css1971
    , contributor
    Comments (870) | Send Message
     
    HTC just announced 90% drop in profits. Coming to an AAPL store near you.
    8 Jan 2013, 06:06 PM Reply Like
  • 2MuchDebt
    , contributor
    Comments (219) | Send Message
     
    @css1971: And what makes you think HTC's performance is a direct correlation to Apple's profitability? You constantly harp about the passing of Steve Jobs as the demise of Apple. Apple has attracted the best talent in the industry. While Jobs was an important figurehead at Apple I say with strong conviction, and respect, that Apple will do just fine without him due to new product releases, product refresh cycles and strong brand and customer loyalty driven by Apple's reliable, easy to use products and ecosystem. Apple's future remains bright, even if it doesn't grow profitability as fast as it did in the past (which in the short term looks to be the case). Sorry buddy, but you're going to have to do better than that to scare people away from this stock and make good on your puts.
    8 Jan 2013, 09:31 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    What is this new product you speak of?
    8 Jan 2013, 09:39 PM Reply Like
  • 2MuchDebt
    , contributor
    Comments (219) | Send Message
     
    There are many that have been talked about, but I don't know for sure. I'm assuming nobody does unless they work at Apple. Did you know how big the iPhone would be before it was launched? Many people talked about the iPhone as if it would be a huge failure. Look at where it is now. All different types of tech companies have followed in Apple's footsteps due to its success. I'm offering a different perspective that I believe is reasonable. Would you disagree?

     

    Where is the 90% decline in profits at Apple that css speaks of?
    8 Jan 2013, 09:55 PM Reply Like
  • rrosey2
    , contributor
    Comments (699) | Send Message
     
    "Ever since the iPhone 5 went on sale at the end of September, Apple's (AAPL) shares have been under tremendous selling pressure. In the last three months, the stock has tumbled by close to 20% despite trading in a quarter that has traditionally been Apple's best due to the holiday season boost........"

     

    The stock is being manipulated, big !

     

    Proof: In Oct, 2012 on one day, a billion dollars worth of Apple stock was bought and then sold by one firm, while almost half that amount was shorted by the same people through an "unnamed" firm.
    Where was the money behind these crooked deals? Who in authority signed off on these transactions?
    Now a complete cover-up and news blackout has occurred.
    See Google, "David Miller, Rochdale, unnamed firm".
    The whole story needs exposure, and the illegal profits earned should be returned to the innocent investors like me, who lost big on stop loss.
    Manipulations like this need to be rooted out and the top perpetrators indicted (not just the "traders").
    No wonder we lose faith in the equities market !
    Apple would do just fine if the crooks kept away from it.
    8 Jan 2013, 05:43 PM Reply Like
  • Etoile Brilliant
    , contributor
    Comments (121) | Send Message
     
    @rrosey2 - Conspiracy theories are the ultimate refuge of the desperate.

     

    As I've said before, it was hype that took this stock to $700, it will be hype that takes it down $400. Its true value lies somewhere in between.
    9 Jan 2013, 04:57 AM Reply Like
  • jewelg
    , contributor
    Comments (15) | Send Message
     
    YES. You are right on track with this! I took a huge hit financially because of this and all the people who are making money by scare tactics and BS information?
    9 Jan 2013, 07:19 AM Reply Like
  • Davidoff
    , contributor
    Comments (306) | Send Message
     
    I think that Apple's priority at this point is the margins, so the specifications are going to be seriously under the average. iPad might be the perfect exemple of the magins chace. Tiny hard disk, a slow processor, no retina and a "cheaper" body are going to be very likely for that phone. Is it going to sell well? Depends of the price. If the price is not unreasonable they will certainly take a large market share on the first quarters. However once again it's going to be a fight between trend and performance. Will people prefer to buy a trendy phone with lower specifications or a normal phone and probably cheaper one with higher specifications? Anyhow Samsung, Nokia, RIM and HTC are going to feel it coming...
    8 Jan 2013, 05:51 PM Reply Like
  • Tack
    , contributor
    Comments (13401) | Send Message
     
    Let's see how this works:

     

    If Apple produces a competitive full-featured phone at a lower price, they canabalize their own sales and say bye-bye to all those fat margins Apple fans always cite. And, if they make a dumbed-down version at a lower price, they'll be laughed at and won't sell any.

     

    Take your pick.
    8 Jan 2013, 06:12 PM Reply Like
  • Afam Edozie
    , contributor
    Comments (259) | Send Message
     
    Apple would be better of buying 49% of a small phone manufacturer (or starting one up), licensing them iOS (at say $10 or $20 per unit or whatever is the right price) and letting them develop Apple compatible phones for the low end market under their own brand.

     

    This enables Apple to preserve its margins, preserve its brand, preserve its focus and go after the low end with a management team who's life depends on succeeding in that market.
    8 Jan 2013, 06:18 PM Reply Like
  • aperture1
    , contributor
    Comments (191) | Send Message
     
    Didn't they try that with the Mac under Sculley?
    8 Jan 2013, 09:40 PM Reply Like
  • berylrb
    , contributor
    Comments (2205) | Send Message
     
    I don't think this is evidence of Apple losing their soul, namely the spirit of Jobs.

     

    Case in point iPod Shuffle and Mac-Mini, both of these are seriously low-end and target the entry level consumer. Both are seriously under spec'd but reliable. And, both have led to a halo effect w/r to consumers purchasing other devices.

     

    I don't know, sounds like something Jobs would do! Three cheers to Tim Cook if this is true.

     

    However, the huge difference between such an alleged low-end iPhone and the iPod Shuffle/Mac Mini is that such a phone has the potential to lead to much larger profits from the international consumers. Hmmm?
    8 Jan 2013, 06:34 PM Reply Like
  • faramarz
    , contributor
    Comments (285) | Send Message
     
    A nice well designed trendy & cool iphone mini will ne as successful as the ipad mini specially in the emerging & european countries where Samsung & Nokia are having a good time.
    Almost all car makers have their mini's & make a lot of money with that.

     

    Apple in not obliged to sell it at 150$. Ipad mini at 329 is selling much better than Nexus7 at 249. People pay the prime for Apple.

     

    An iphone mini at 250 to 350 $ can also take a specific market. Many people like to buy Apple & enjoy the ecosystem but dont have the use for a full future iphone.
    8 Jan 2013, 06:53 PM Reply Like
  • aparo201@google.com
    , contributor
    Comments (153) | Send Message
     
    To all those who say a cheaper iPhone is the end, the response is understandable, but please hear me out for a minute.

     

    A "cheaper" iphone for a different market can still be "premium". it can be the most expensive phone in the category so that people still have to stretch their smartphone budget to buy it. It will be the "premium" phone in that lower category that will sell for more than the competition, while still being affordable.

     

    BMW has the 3 series, 5 series, 7 series, Mercedes offers C, E and S class. The point of the entry level series is to offer someone willing to stretch from a loaded "non premium" brand (someone willing to pay $35k for loaded Accord, for example). those people keep buying the brand, and move up as they do better.

     

    Apple should strive to do this. If managed right, and it will be (it won't be called iCheap, I assure you), there is no reason that this should hurt its image, anymore than BMW is hurt for offering 3 model lines that differ dramatically in price. if done right, Apple can see its products and ecosystem open to literally billions of people. Also, in Europe Mercedes and BMW offer cheaper, smaller models than are offered here, all while maintaingn a premium image both in Europe and in the U.S., so it has been pulled off sucesfully before.

     

    Having a differnt priced iPhone is consistent with Apple's strategy. If this rumor proves true, and it's just a rumor, Apple should strive to introduce high margin producs that redefine the category, even if that category is at lower price point.

     

    And think about this, most Apple products come in different specs at differnet prices now anyway. Macbooks for example come in differnet sizes, with Retina screen and without, with normal hardrive, all solid state, or fusion, and there's a dramatic difference in pricing from the lowest to highest spec'd models. Ditto for iMacs. While the analogy is not perfect because even an entry level macbook costs more than most other laptops, my point is that a "cheaper" iPhone for developing markets should still be premium.

     

    while there are risks, the rewards could be huge, and there is nothing inherently wrong in a premium brand offering having different levels of premium.
    8 Jan 2013, 06:57 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    Your comparison with a company like BMW is misleading. Apples existing line up with the 4, 4S and 5 are simillar to what BMW markets. BMW has priced their vehichle lines to compete with the highend lines of companies like honda and toyota. The quality of build in a $35k honda compared to a $35k bmw is significantly different. I should know because I own a 01 accord and an 01 X5. Both cars are excelent vehicles but I can tell you first hand you get more for the buck from a german manufacturure. A BMW will still look new 10 years after you bought it where a honda will be a pile of rust. What people don't understand about apple is the quality and level of support you get with their products. When my phone or ipad doesn't work i take it to the apple store and have always received a new one with out any questions. Their competition cannot provide that level of support. Additionally one advantage that apple has always had with its products is their ability to manufacture their own software and hardware. This position allows them the ability to provide a relatively flawless product in almost every product line release. I as more hardware and software options become available for smartphones I see apples competition running into more conflicts. Heres an example: Back in 05 I built a computer running on Windows xp. With in months this computer runs slow and requires a reinstall to restore speed. The problem is windows operating systems must maintain compatibilty with a vast number of hardware manufacturers some of which work better than others. On the other hand my Macbook pro I purchased in 2008 still seems to run just as smoothly as it did when I purchased it and I've updated the OS each time apple has issued a new release. This hardware/software advantage will always play in apples favor and also the 3rd party software programers.
    A cheap phone is the oposite of what apple needs to release. What they should do is release a new iphone next fall with features (both software/hardware) that will blow the competition out of the water. The only thing that has hurt apple thus far is that the competition tech has ALMOST caught up and in some cases they have developed slightly better hardware (screens). In my opinion i expect the next iphone to incorporate some heavy duty improvements that will once again put them ahead of the pact. Apple also needs to push some new product pipelines. Yes, you've probably already heard about it.....a TV. But not just any TV a TV with 4K resolution, a computer, media player, iphone/ipad streamer for games/interface, face time and siri all integrated into one box.. With that said apple will verge into their primary competitions market with a new and improved product. The only thing that may be unpractable is the 4K resolution in a 50inch screen. A 2k resolution in a 42inch display is definatley in reach at a very affordable price. Other than the screen itself they've already developed everything else. How awesome would it be to be able to talk to you TV and get real time updates on games while watching sunday football or march madness. What about surfing the web while watching a game with picture in picture? This is where apple needs to head next. Building cheaper products is not the right move.
    8 Jan 2013, 07:52 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    If apple executes this and quickly they will redefine the meaning of "smart tv" just like they did with "smart phone".
    8 Jan 2013, 08:00 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    The wrong move for apple is for them to start making a cheaper quality product. This company will move down hill if that is the direction they take. At the current prices for their existing line you get a quality product with awesome support that cant be matched by their competitors. I don't buy it.
    8 Jan 2013, 07:06 PM Reply Like
  • aparo201@google.com
    , contributor
    Comments (153) | Send Message
     
    They should offer offer entry level luxury,not a cheaper quality product. We are talking about a market for whom the difference between 150 (what Samsung sells a lot of phones for in china) and normal iPhone price of 800 equals two months salary. They may be willing to stretch to 200 for a good quality product from a premium brand, same way someone considering a loaded Accord may stretch for a BMW 3 series. The 50 dollar phones, forget that.
    8 Jan 2013, 08:01 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    I guess my point is that apple already offers this with the iphone 4 and 4S. I can't how another phone will fall into the existing lineup unless they put iphone 4 or 4s hardware into a iphone 5 body. I cant see how this would help their cause. I'd be more willing to bet on a price decrease on the the iphones 4S and 5 before they release a new phone.
    8 Jan 2013, 09:12 PM Reply Like
  • aparo201@google.com
    , contributor
    Comments (153) | Send Message
     
    Maybe that's what they will do, some version of rebranding the older phones. Take the 4 or 3g and call it something else, some cosmetic changes. Not sure because if that works, I don't know what the competition is offering at 150. Anyway we've both shed a lot of ink on a rumor.
    8 Jan 2013, 09:22 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    I don't buy it. If cheaper is better than why wasn't that mentality implemented on the iPad mini. This has to be a false report!
    8 Jan 2013, 07:09 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (16416) | Send Message
     
    http://seekingalpha.co...
    8 Jan 2013, 07:23 PM Reply Like
  • dmarilley
    , contributor
    Comments (613) | Send Message
     
    This is just the first chapter in an obvious story about inexorable margin deterioration.
    8 Jan 2013, 07:26 PM Reply Like
  • dmarilley
    , contributor
    Comments (613) | Send Message
     
    Also, watch out for Vizio.
    8 Jan 2013, 07:26 PM Reply Like
  • Ananthan Thangavel
    , contributor
    Comments (836) | Send Message
     
    This is the beginning of the end for Apple. They have finally realized they can't penetrate emerging markets at their price points, and they're going to downgrade their products to compete. This means lower margins and worse, more stratified products, which is essentially what the entire rest of the smartphone market is. As Apple's margins fall, their stock will take a big hit.
    8 Jan 2013, 07:53 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    Margin erosion.
    8 Jan 2013, 08:36 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    In the 1990s there was Dell. The stock would grow 50%+ year after year. Then came the sub-1000 PCS, then the sub-500 PCS, so on and so forth, and Dell, now, is not doing so well.

     

    What goes up must come down.
    8 Jan 2013, 08:37 PM Reply Like
  • 2MuchDebt
    , contributor
    Comments (219) | Send Message
     
    You're right Macro. Apple is exactly like Dell... I will take your advice and short Apple because of a completely different company's performance in a different decade. Thanks for the input.

     

    Side note: it's truly amazing, and quite entertaining, to see the oracle's of Apple's future. Apple should just hire all those who post negative comments on this site and Apple would shoot back up to $700/share due to a far superior strategy.
    8 Jan 2013, 09:43 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    There is no long term strategy in consumer electronics. It is deflation central.
    8 Jan 2013, 10:45 PM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    I don't know if that statement is true. What I see happening in the technology sector is a steady increase in inovation and it all started with apples iphone. The concept is to take existing products and make them substantially better/affordable and release new technology at higher margins. I think the tech industry has learned alot from the previous crash. What has made apple so successfull is inovation and others have learned from this and are continuing movement. Here are some examples google TV, Apple TV, the nintendo 3DS, PS Vita, Boxee, Tablets, Tablet PCs, 3D TVs, OLED TVs, 4K TVs, solid state hardrives (we could have had these years ago), LTE, Advance LTE..................... As an electrical engineer I've always felt that the tech industry spent too much time trying to milk every dime out of their patents and as a result we saw we saw it crash. Apples inovation and growth has convinced these companies that in order to thrive they must try to top one another in a never ending race. Milking and diming your products lines will only result in a loss of interest from the consumer. Apple successfully showed that people will continually buy their products over and over again as long as new releases have something that tops previous ones. What has hurt apple is that they did not use this strategy with the iphone 5. With the 4 you had the retina display and with the 4S you had apple TV streaming, SIRI and a big push with facetime. The only cool/significant features the iphone 5 really has to offer is bigger screen and panaramic pictures while larger screens (some may even say better) were already on the market from their competitors. The iphone 5 is a weak product and one of the first releases from apple where they appear to be trying to play catch up rather than seting the bar. Other than that a iphone 5 really isn't much better than a 4S with the exception of hardware performance (always expected). My hope is that this weakness has something to do with them redirecting their efforts to make the iphone/ipad more compatable with service providers in other contries. Given that companies like Samsung, nokia, and LG have been doing this for years it must have been more of a burden for apple considering that they need to implement software and hardware to make it work. I think apple will make up for the disappointing iphone 5 in their next release. If they can bring the wow factor back in the game and create one or two new product pipelines then $700 or even $1000 a share will easilly be achieve able. Their plans of building a MAC line in the US and potentially making this trasition with other product lines will help support the higher cost of their products. As of right now I stongly feel that you get what you pay for with apple products and their new direction with manufacturing only support them further because americans will buy american made products. Companies are starting to realize what the consiquencies of out sourcing over seas (lost/stolen components, patient infringment, and the high potential in the increase in labor cost.
    9 Jan 2013, 10:48 AM Reply Like
  • SoldHigh
    , contributor
    Comments (1013) | Send Message
     
    Cheaper phone --> lower margins (and lower y/y growth, if any) --> lower stock price.

     

    Co Sounds desperate.

     

    Jobs would have created a new product and new market instead of playing limbo with the competition.

     

    AAPL 300s this year.
    8 Jan 2013, 09:08 PM Reply Like
  • Michael O'Neill
    , contributor
    Comments (244) | Send Message
     
    This is great news. Period.

     

    All those that want to buy an Apple (Students, Low-Income, Developing Countries - about 80% of the World) will now be able to do so.

     

    The people who buy the preium Apple iPhone will never change. Would a BMW 7-series driver ever buy a BMW 1-series? No of course not.

     

    Apple will grow market share, and as these people/countries develop they will migrate onto the premium products.

     

    They will also add revenue from day one throught the App Store.

     

    What many fail to understand is when Apple sell an iPhone/iPad they also calculate the expected revenue from the ecosystem as well, which as we know has zero distribution costs. Samsung without any ecosystem, has to just keep selling hardware a lower and lower prices to compete with Apple.

     

    This is very very bullish news for Apple investors indeed.
    8 Jan 2013, 10:08 PM Reply Like
  • Macro Investor
    , contributor
    Comments (9049) | Send Message
     
    Once upon a time the blackberry was the smartphone of champions. They would never go to the iPhone, they said. We all know what happened.
    8 Jan 2013, 10:49 PM Reply Like
  • Rrobert107
    , contributor
    Comments (4) | Send Message
     
    Aren't they 90% of the way there with new iPod touch? cost, camera, form factor, ability to make millions...."just" add cell capability...maybe downsize memory?
    8 Jan 2013, 10:44 PM Reply Like
  • Eric Rolfe
    , contributor
    Comments (28) | Send Message
     
    The more likely scenario is that Apple shortens the release time between phones to about 8 months and just keep pushing down the price of the iPhone 4. It is currently $450 with no contract. If it goes down $100 bucks every time a new apple product comes out you will be looking at a $250 iPhone in less than 16 months.
    8 Jan 2013, 11:14 PM Reply Like
  • texwatts
    , contributor
    Comment (1) | Send Message
     
    It's much more difficult to stay at the top than it is to be three or four down the list. Apple's performance as of late has also been impressive but still the market sees apple running out of steam.
    That's why I think, Apple needs to tap every market they can, as long as they keep making high quality stuff
    9 Jan 2013, 12:49 AM Reply Like
  • rayates44
    , contributor
    Comments (5) | Send Message
     
    I am sick and tired of all the AAPL scare tactics and worry over anything somebody thinks they smell. iPhones can be gotten nearly free! My daughter upgraded our four grandgirls to iPhone 4S's for Christmas for 99 cents each! The family data plan (pronounced "day'-tuh" by the way, not datta) at $80/month did not change (AT&T). All the negative from Seeking Alpha has totally ruined the Christmas Rally, and clearly won't come back by January expiry of options. Thanks a lot!
    9 Jan 2013, 01:23 AM Reply Like
  • daveed9
    , contributor
    Comments (4) | Send Message
     
    consider that by lowering phone cost to the customer and attracting a new demographic, they maximize the number of people who own apple products. clearly, apple brand loyalty is huge. a move like this MIGHT affect margins in the short term, but long term profits are likely increased by maximizing the sheer number of apple owners.
    9 Jan 2013, 01:23 AM Reply Like
  • kf6spf
    , contributor
    Comments (4) | Send Message
     
    Um ... it's not like AAPL is having trouble selling iPhones. They can't make them fast enough!

     

    Considering that AAPL controls 60% of the smartphone profit with less than 20% share of the smartphone market suggests that AAPL being worried about the bottom end of the market is ridiculous, at best.
    9 Jan 2013, 02:01 AM Reply Like
  • davioud
    , contributor
    Comments (32) | Send Message
     
    Apple should simply forget the low cost phones. Act as BMW and Mercedes . They are the only car companies making big profits on small volume. Apple does not need to be the next NOKIA or TATA.
    Let the small player live , APPLE cannot and should not try to be the sole provider of smartphones. Just be different and UPSCALE.
    9 Jan 2013, 02:02 AM Reply Like
  • Market Evolution
    , contributor
    Comments (6) | Send Message
     
    Unnamed sources in the WSJ article all work for Samsung... Unless it comes from Apple - it's just noise to sell newspapers.
    9 Jan 2013, 06:48 AM Reply Like
  • Annie laurie
    , contributor
    Comments (4) | Send Message
     
    I did! nothing happens--
    9 Jan 2013, 06:49 AM Reply Like
  • fafatooey
    , contributor
    Comments (377) | Send Message
     
    The new Obamaphone.
    9 Jan 2013, 07:11 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (388) | Send Message
     
    Based on Apple's ability to execute and deliver the TOP quality devices, why would anybody expect less in a lower tier smart phone?

     

    There are markets of literally billions of people that Apple can access by providing a less expensive ('cheaper') model. It doesn't mean it has to be any lower quality than what Apple currently does. They aim to be the best in every market they are in - being the best in a lower cost market doesn't lower the value of their brand.

     

    I think it's funny that people assume Apple is simply going to abandon the principles that have made them one of the most successful companies in history. "Oh noes!! Steve Jobs is dead! Quick, let's all panic and run the company into the ground!!"
    9 Jan 2013, 08:23 AM Reply Like
  • nguyenvanphuoc
    , contributor
    Comments (388) | Send Message
     
    "AAPL 300s this year. "

     

    Of course. AAPL is in so much trouble that it will start trading at 2x cash and 6x earnings.

     

    Run for the hills, everybody.
    9 Jan 2013, 08:25 AM Reply Like
  • tclark13
    , contributor
    Comments (133) | Send Message
     
    A huge chunk of the world can't buy smart phones subsidized by 2 year service contracts. My guess is they don't even sell this phone in the US. And I bet there are a lot of people who would buy a stripped down iphone for 350 who can't afford a full feature version for 700. Look at the wide range of features and prices for apple computers, pads and ipods. I think it's a great idea and if I was a competitor selling cheap smartphones I'd be quite concerned.
    9 Jan 2013, 08:39 AM Reply Like
  • Tack
    , contributor
    Comments (13401) | Send Message
     
    The issue facing Apple demonstrates the peril of the high-margin, lower-volume business model (Apple) versus the low-margin, high-volume business model (Samsung).

     

    Apple has always adopted the "Mercedes" approach to products, preferring to introduce the most elegant and expensive models at high margins. This "skim-the-cream" approach to the market is especially effective when one has a technology leadership position, effective marketing and limited or no competition. But, it only works as long as those ingredients ca be maintained.

     

    The original Mac vs. PC demonstrates what happens in this model over time. Eventually, volume is ceded to competitors, and they, based on higher volumes, are able to offer competitive products at lower cost. Then, the choice is either to maintain margins and settle for a smaller sliver of volume, but only if a truly elite product can be maintained, or to cut prices and battle it out for greater volume against the emergent competitors.

     

    As regards the global smartphone market, Apple has already ceded the volume to Android, which now outsells iOS by a margin of over 4:1, and is expanding. However, in the smartphome business it isn't only hardware sales and margins that count, but the ongoing business of monetizing software sales from the "installed base." Apple has been especially effective, so far, in monetizing its user base, more so than Android. However, that advantage is going to be negatively impacted if Android increasingly sucks all the air out of the room by outselling Apple significantly in hardware. Apple realizes this, and that's why they're pondering the dilemma of the margin-vs-volume conundrum.

     

    In the long run, it's always advantageous to be the high-volume, high-market-share producer because it affords so much more flexibility in spreading costs and creating inefficiencies. The lower volume producers have a much more difficult, mostly impossible, time generating a profitable model at the higher-volume price points.

     

    So, the choice for Apple is a bit binary. They can battle for volume growth to maximize future software sales, or they can make elite products and settle for lower volumes. The ability to do both effectively is rare, and sometimes even the attempt compromises both efforts. It would seem advisable, given Apple's present status and competitive position, that Apple take the high road because there's nothing in their history or character that suggests they can be effective in the low-cost trenches.
    9 Jan 2013, 11:08 AM Reply Like
  • ashtarir
    , contributor
    Comments (87) | Send Message
     
    Somewhat misleading but I caution that I may be wrong. I'm pretty confident that Apple still has high margins on there computer line. A mac or macbook is generally more expensive than the average PC based Laptob or home computer. With this said the growth apple has seen in their personal computing division has been outstanding in the last few years and I see it continuing. This in itself shows that the stratagy they have been using has been working great because people are willing to pay. The only thing that is hurting apple right now is that the iphone 5 really doesnt set itself aside from other phones in the market.
    9 Jan 2013, 11:34 AM Reply Like
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