Rumors continue to fly about a budget-priced iPhone. Although we here at TUAW remain completely agnostic on the likelihood of this product, we certainly can understand why Apple would benefit from a low-cost product -- and not just for emerging markets like China.
Consider the iPad 2. It's still for sale, with a budget price and great Apple engineering. The iPad 2 and the mini represent affordable products with high demand that consumers are choosing over high-end features like Retina displays.
Why wouldn't an iPhone benefit from a similar pricing spectrum? It's not the extra phone hardware (you can buy a cheap phone at any TracFone or Cricket dealer) that's driving costs. Even the lowest-priced current iPhone model (the iPhone 4) requires a 2-year commitment in the US. That commitment and low up-front costs hide the true price of the unit. The iPhone 4 still costs US$450 contract-free.
America's bizarre contract plans hide true hardware prices. This is particularly frustrating to our overseas-based TUAWians. They want to buy a modern iPhone running the latest iOS but an affordable price and not necessarily with all the latest bells and whistles of the sexy flagship release. Paying US-style high-but-hidden-costs for Apple handsets goes against the grain.
High handset prices also work against US adoption amongst high schoolers, an important market. Today's HS kids expect a lot of sophistication from their phones and aren't willing to settle for the iPod touch. They want data, texting and calling plans more than they care about gyroscopes, top-end cameras and Retina displays. Their parents, footing the bills, are searching for bargains and compromise. If they can't get it from Apple, they'll get it from other vendors. It's a vast untapped market for Apple, full of potential.
You'd think if Apple could deliver a modern, feature-packed mini iPad for about $300, they'd be able to ship a low-end iPhone for near that, plastic chassis and all.
What do you think? Is an iPhone 5B ("B" for bargain") phone in the works? Or is this something that Apple will avoid in order to preserve its premium brand? Cast your vote in the poll and then join in the comments with your analysis and opinions.