As of now Apple only competes in the high-end smartphone market, but rumors have been circulating that Apple is interested in producing a cheaper iPhone. According to Piper Jaffrey analyst Gene “The Apple Television Is Real” Munster, a cheaper iPhone would allow Apple to sell handsets to a market that has 580 million potential customers, or 65 percent of the market.
In a note to investors, Munster said, “We believe that the high-end smartphone market (above $400 USD off contract) for [calendar year 2013] will be about 320 million units, of which we believe Apple will capture 50% market share. We believe this means Apple is missing the other 65% of the market, or 580 million units, given its current product lineup without the lower priced phone.”
Munster thinks the opportunity is too big for Apple to pass up, as the low-end market is growing faster than the high end smartphone market.
He previously said that he sees a cheaper iPhone generating $6.5 billion in revenue for Apple, assuming the rumored iPhone were to launch at the end of 2013. Munster expects a cheaper iPhone to go for around $199 for a new, unsubsidized iPhone.
Right now Apple’s cheapest iPhone without a contract is the iPhone 4, which sells for $450 in the U.S. Taxes bring this up to $490 in China and $750 in Brazil, two key countries where low-end, contract-free smartphones are big sellers. That said, on contract, customers can walk away with an iPhone for free (iPhone 4), $99.00 (iPhone 4S), and $199 (iPhone 5). It doesn’t really get much cheaper than that, considering the majority of consumers buy their phones on contract still.
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