Cheap iPhones: To Be Or Not To Be

Recently, we hear more and more rumors about Apple’s plans to release a cheap iPhone, and since Apple hasn’t officially confirmed these rumors yet, some of us just don’t believe them. After all, Apple has always been famous for making premium devices, and low-end phones will most likely affect the company’s “coolness”. Will Apple risk its reputation to make cheap devices?

Piper Jaffray analyst Gene Munster thinks that in Q3 2013 Apple is really going to release a new iPhone that will cost only $199 (unlocked). Why? Obviously, to grab a bigger market share and increase its gross profit. Munster thinks that Apple will sell 37 million low-end iPhones this year and 96 million units next year.

After analyzing the smartphone markets in a number of European and Asian countries, Munster discovered that the iPhones are actually much more expensive than other phones with similar specs. For example, the iPhone 4, which is already considered to be a low-end device, costs 133% more than other low-end phones; the mid-range iPhone 4S is priced at 48% more than other similar phones, and the high-end iPhone 5 is about 19% more expensive than other high-end phones (truly, even the Sony Xperia Z that can easily beat the iPhone 5 costs less).

Munster believes that a cheap iPhone will be more competitive in terms of price. But the fact is – people buy the iPhones even despite the fact that they’re overpriced, because many of them think that owning an Apple device in cool. Will those people agree to buy cheap, plastic iPhones? I doubt they will.

Besides, an iPhone for $200 will not be competitive at all. What features will it have? A small touchscreen at 3.2 or 3.5 inches? And what about resolution? 400 x 600? Or even 320 x 480? Other than that, the cheap iPhone will most likely have a weak single-core processor and a camera with a 3 or 5MP sensor. Actually, there are many Android phones with similar or even better specs, and those who’re looking for low-end and cheap devices will most likely prefer those Androids over the new iPhones.

Maybe Apple will really manage to sell 37 million of those low-end iPhones this year, just like Munster has predicted, but I am sure they will be forgotten before the end of the year. And Apple will definitely not be able to sell that many units in 2014, since those phones will already be outdated by that time.

So I really think that making cheap iPhones isn’t quite a good idea for Apple, since those phones won’t be competitive enough to beat low-end Android phones, so they won’t bring good profits, and Apple will only hurt its reputation of a company that makes premium devices. What do you think?

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