Sources say the rumored budget Apple iPhone will be made from polycarbonate or plastic. But why, again, are we so interested in these speculations?
Apple is at a crossroads. While the company still gets the lion’s share of profits from smartphone sales today because of its huge per-unit margins, the Cupertino, CA company recently saw its stock price dip, which might be worrisome to some stockholders. Given that Apple is fast losing its smartphone market share to Android devices, some industry observers are speculating that the iPhone maker might be looking to release a low-cost smartphone to demand in emerging markets.
Apple earlier denied any plans to produce a low-cost variant of the iPhone, arguing that its previous years’ models serve as entry-level devices. For instance, the current iPhone 5 is Apple’s flagship model, but it still sells the iPhone 4S as a mid-range device and the two-year old iPhone 4 as an entry level smartphone, which is still serviceable for users who don’t need resource-hungry apps.
This time of the year is rife for new iPhone rumors, because it’s that time of Apple’s product cycle in which it usually announces updates. The latest speculations? The inexpensive iPhone will be made of plastic. As more details emerge about the budget iPhone, sources say that the low-cost iPhone will have a design that will borrow heavily from three products: the iPhone 5, the 5th-generation iPod touch and the iPod classic. One striking difference it’s supposed to have from its flagship sibling is that the cheap iPhone will supposedly be made of polycarbonate.
Apple is said to retain the iPhone’s Gorilla Glass touchscreen, though, thereby maintaining its strength and scratch-proof advantage. But using polycarbonate instead of aluminum will reduce cost and make the budget iPhone easier to produce.
Why all the fuss?
Why are we so interested in cheap iPhones, then? Are we not satisfied with Apple’s current offerings? The answer here is diversification. Apple is not exactly doing well in emerging markets in Asia, where the average mobile phone user tends to go for the lower end of the price spectrum. Even in key cities, the iPhone is no longer considered cool. Here, the business model is drastically different from the U.S., where consumers can afford to pay hefty monthly fees in exchange for a subsidized smartphone (which can either be “free” or “cheap”). Even in the U.S., carriers like T-Mobile are shifting away from subsidies and encouraging “bring your own” device plans. Closer to home, in China, Apple has launched installment schemes for its iDevices to better compete against inexpensive competitors.
As such, the budget iPhone will be the perfect weapon of choice for Apple in emerging markets, in combatting the slew of cheap Android devices flooding the market. Some industry observers even say the inexpensive iPhone is “ready for China,” referring to the fact that Chinese are crazy for flagship devices like the Xiaomi Mi-Two, but want it priced within reach. To illustrate, the flagship Mi-Two is priced about US$320, which is a steal compared with the US$650 price tag for the iPhone 5.
“A budget iPhone model would help sales in populous but underdeveloped countries to grow,” writes iLounge editor in chief Jeremy Horwitz.
If we use the notebook computer analogy, the budget iPhone will be akin to the old polycarbonate MacBook, while the higher-end iPhone 5 will be the retina display MacBook Pro, made of aluminum and with far superior specs and craftsmanship. If Apple does come up with a product like this and sell at a reasonable price, then it might be able to recapture market share in both emerging and flagship markets. See how the smaller and cheaper iPad mini revitalized interest in the platform.
Featured image credits: Shutterstock
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