Analyst Claims Apple May Release $349 iPhone for Prepaid Markets This Year

Fortune reports that Deutsche Bank analyst Chris Whitmore today released a new research note claiming that Apple may be preparing to release two new iPhone models later this year, with the usual iPhone revamp being joined by the debut of a cheaper model coming in at an unlocked, unsubsidized price of $349.

In a note issued early Monday, Deutsche Bank's Chris Whitmore is telling clients to expect both -- an iPhone 5 and an iPhone 4S.

"With Nokia and RIMM struggling," he writes, "the time is right for Apple to aggressively penetrate the mid range smart-phone market (i.e. $300-500 category) to dramatically expand its [total addressable market] and market share."

As Whitmore sees it, an iPhone 4S that is unlocked, priced around $349, and comes with a pre-paid voice plan would "drive significantly greater penetration" into an addressable market that has grown to include 1.5 billion potential customers in 98 countries, two thirds of whom prefer pre-paid plans.

Whitmore notes that while the market for prepaid smartphones is very small in the U.S., many other markets around the world have much higher levels of prepaid activity, and a cheaper iPhone would significantly lower the barrier to entry for those customers.

deutsche bank pre postpaid
A cheaper (and in many cases smaller) "iPhone nano" has been the subject of many rumors over the years, although it is unclear just how Apple will be able pare down the current iPhone's feature set to bring the unsubsidized pricing down to the $349 level suggested by Whitmore, or even lower price points as suggested in previous reports. Unsubsidized pricing for the iPhone 4 begins at $649, although the 8 GB iPhone 3GS still sold by Apple comes in at a much lower $449. With Apple's iPod touch line starting at $229, there may in fact be some flexibility to put together a somewhat stripped down iPhone coming in at a price point in the $350 range.

Also unclear is the basis of Whitmore's claim, whether it be concrete information obtained from Apple's supply chain or mere speculation on what Apple "should" do.

A separate note issued yesterday by Morgan Stanley's Katy Huberty claims that Apple is set to begin ramping production of a new iPhone in mid to late August, suggesting that a launch might not occur until late September. Rumors have increasingly pointed to a September launch for the next iPhone, although many have been hoping that Apple will introduce it at an early September event in line with the company's usual iPod-focused event.

Related Forum: iPhone

Top Rated Comments

osx11 Avatar
167 months ago
Americans just love paying $1000+ per year for their cell phones. And then they wonder why they are all in debt. Couple that with a daily $4-5 Starbucks drink and you have roughly $2.5K for an iphone and coffee for ONE YEAR. Over 40 years, that comes out to be $100,000 for a cell phone and a daily morning coffee. That's just stupid.
Score: 6 Votes (Like | Disagree)
M-O Avatar
167 months ago
No it wouldn't, the customers that have been buying the premium iphone will continue to buy the latest & nicest iphone, but the people who have been buying the $229 touch will now buy the $350 iphone nano. (which is what i would be inclined to).

same here. if this were nothing more than an iPod touch with a cell radio, earpiece and relocated mic, i'd buy it.

iPhone A: 16GB, A5, 4G radio, 8MP camera, $199 on contract
iPhone B: 8GB, A4, 3G radio, 3MP camera, $299 contract free

something like that. heck to save money, just lower the price of the iPhone 4. which is more likely.
Score: 4 Votes (Like | Disagree)
dethmaShine Avatar
167 months ago
- Essential for markets where pre-paid/post-paid plans are very popular. Among best examples would be markets like: India, China, Malaysia, etc.

I belong to India and I'm aware that almost every person who buys a phone is on a post-paid [per monthly] or a pre-paid plan. But both these plans do not include the cost of the phone. You've got to buy the phone yourself. $350 sounds like a great price for such a market.

- Lets be honest: not everyone affords an iPhone. I used to have an iPhone but at present I use Mozart7. I got a couple of Trophy7s for mom and my aunt.
Why? - work like an iPhone -- touch screen ... but cheaper than the iPhone. An iPhone 4 would have cost me close to £500. I got the other two for a total less than £500. :rolleyes:

- Not everybody carries an expensive phone. If I were to gift a phone to my little brother or probably my girlfriend, I'd buy a cheaper - non-iPhone model. If a cheaper option was there, I wouldn't have been bothered at all.

iPhone has to become cheap overtime if Apple needs to take care of some more people. They are going good with whatever they have but if they need to aggressively compete, they need a cheaper iPhone.
Score: 4 Votes (Like | Disagree)
TheAustrianGuy Avatar
167 months ago
Why should Apple design an all-new pre-paid iPhone...

...when they have a then-quasi-outdated iPhone4 they can sell as low-end model?
Score: 4 Votes (Like | Disagree)
actripxl Avatar
167 months ago
No it wouldn't, the customers that have been buying the premium iphone will continue to buy the latest & nicest iphone, but the people who have been buying the $229 touch will now buy the $350 iphone nano. (which is what i would be inclined to).


I would do this in a heart beat if I'd be able to get it on Virgin Mobile, heck Virgin Mobile sells the iPhone in Canada.
Score: 3 Votes (Like | Disagree)
Kar98 Avatar
167 months ago

The problem is that prepaid folks doesn't have purchasing power

Big bold assumption there. People on prepaid just don't see a reason to pay $80 a month, when $15/month prepaid plans fit their usage much better.
Score: 3 Votes (Like | Disagree)

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