Apple to Target Emerging Markets with Low-Cost Phone to Launch in September at $199?

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Piper Jaffray analyst Gene Munster late yesterday issued a new research note using average low-end smartphone pricing in emerging markets to argue that Apple's rumored lower-cost iPhone will launch in September with a price tag of around $199 unlocked.

piper_jaffray_world_unlocked_phones
Munster examined smartphone pricing on 15 different models across six international markets (Germany, UK, France, China, Brazil and India) to find that lower-end smartphones average slightly over $200 unsubsidized. In China and India, the average prices are $138 and $140 respectively, while Apple's cheapest existing phone, the iPhone 4, averages over $500.

We believe the last finding demonstrates that the biggest pricing gap for iPhone exists between the cheapest iPhone and the average low-end smartphone. This low- end segment is important given we estimate it is a $135B market in 2013 that Apple is currently not participating in (60% of smartphones, or 540m units at a $250 ASP).

Munster predicts Apple will announce its low-cost handset in September, and estimates that a $199 price tag would generate sales of 37 million phones in the rest of 2013, 96 million in 2014 and 170 million in 2015. While an iPhone at that price would carry much lower profit margins for Apple, Munster believes that the opportunity is so significant given the size of the potential market that Apple will be willing to focus on gross profit through volume rather than margins.

While rumors of a lower-cost iPhone have been picking up steam in recent months, a price point as low as $199 would seem to be overly aggressive for the company given its refusal to sacrifice quality to achieve a low price. Tim Cook noted at last week's Goldman Sachs conference that "the only thing [Apple] will never do is make a crappy product", and it remains difficult to see how Apple could provide the iPhone experience at such pricing.

Top Rated Comments

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99 months ago
Why does MacRumors keep reporting Wall Street analyst predictions as rumors? What inside information does Gene Munster have exactly? :rolleyes:
Score: 6 Votes (Like | Disagree)
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99 months ago
Apple to Apple Apple iPhone Apple Apple in Apple Random Month Random Price?
Score: 3 Votes (Like | Disagree)
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99 months ago
He has made a guess at a price he thinks Apple could sell a lot of phones at, but without considering if Apple could make a phone at that price.

He also say that it will succeed on volume rather than profit margin. That is not Apple's way.

This is the least believable story on the front page I have seen. It has no basis at all.
Score: 2 Votes (Like | Disagree)
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99 months ago

Where did this go school to figure out math like that?


Where did this go school to figure out english like that?
Score: 2 Votes (Like | Disagree)
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99 months ago
It boggles my mind that analysts (who were supposedly schooled) are so fixated on marketshare as if that's the only measure of success. They remind me of moths irresistibly drawn to a flame... They just can't help themselves.
Score: 2 Votes (Like | Disagree)
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99 months ago
I'm living in Mauritania (Africa) at the moment and there are tons of Samesung shops. Many of which are pretty ridiculous looking but nevertheless, they exist.

I've been meaning to take pictures and post them because some of them are hard to even imagine...

Even if Apple makes a low cost phone, they will need to vastly open up who can sell it if they wish to compete in a place like this.
Score: 2 Votes (Like | Disagree)

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