Analyst Toni Sacconaghi of Bernstein Research predicts Apple could increase its addressable handset market by 6X in unit volume and 2.5X in revenue with the launch of a smaller, less expensive iPhone model, says Forbes. These projected numbers come from his analysis of handset market share and Apple's current market reach. Sacconaghi suggests Apple misses 60 percent of the handset market with its current strategy that limits distribution to select carriers and sells the iPhone at a relatively high price point.
Sacconaghi predicts Apple could take two approaches with the cheap iPhone. In one scenario, Apple would produce the iPhone mini, a scaled-down version of the iPhone that would offer a less robust internet and App experience. The handset would be less data-intensive and would debut with a low-cost data plan that costs $15 or less per month.
The other option would be to sell an "iPhone touch," which would be an iPhone without a data plan. This hypothetical beastie would have all the capabilities of the iPod touch plus voice calling, but no cellular data. 3G connectivity would be available but optional, a scenario that would let users rely on Wi-Fi for all their data needs. [It's not clear from the Forbes excerpt of the report if Sacconaghi is explicitly saying that hardware-wise, an "iPhone touch" is identical to an iPhone -- Apple would need to include all the 3G radio chips, antenna and corresponding battery power to handle 3G data if it's a customer-selectable option. --Ed.]
Sacconaghi suggests that both of these handsets could debut with retail prices close to or less than $149. if Apple could capture even 5 percent of its missed market share with a cheap iPhone, the Cupertino company could see a minimum annual profit boost of $4.50 a share. [Another bit of confusion here; it's not at all clear that Toni S. is considering the unsubsidized price of the current iPhone, which starts at $599 and goes up from there. How we get from that price down to $149 without the full support of a carrier subsidy -- harder to justify without a revenue-rich data plan attached to the phone contract -- is not really clear. --Ed.]
While Sacconaghi expects Apple will make this move to a less expensive model, he believes the chance of a summer launch is low. The analyst points out that Apple's iPhone 4 supply is still constrained, and the manufacturer would not want to steal the thunder from the launch of the iPhone 5 expected in June. If Apple were to pursue this low-cost option for the iPhone, perhaps a fall launch tied into its annual iPod refresh might be a more realistic possibility. Thoughts anyone?
- Key specs
- Reviews • 40
- Type Smartphone
- Operating system iOS (8)
- Screen size 4.7 inches
- Internal memory 16 GB
- Camera 8 megapixels
- Dimensions 5.44 x 2.64 x 0.27 in
- Weight 4.55 oz
- Released 2014-09-19