back to article Apple may debut low-cost iPhone for emerging markets in 2013

Apple has made a name for itself by marketing high-end gadgets to affluent, design-conscious consumers, but it could be planning a move down-market as early as this year, if industry scuttlebutt proves correct. On Tuesday, Taiwanese tech news outlet DigiTimes was the first to report on rumors that Apple may be readying a new, …

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>Oddly, one source claimed that the new iPhone actually has a larger screen than earlier models

Well, making it bigger could make it cheaper. Maybe if it had a larger chassis, a larger battery could be used to run less efficient and cheaper chips. Or maybe a larger screen easier to manufacture, since the pixel density is lower. Maybe a larger device would easier to assemble.

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"consumers" or "customers"?

"...the Mozilla Foundation is planning a major push into emerging markets with its Firefox OS, citing the "billions" of consumers who are expected to come online for the first time in coming years.

Those are billions of customers Apple can't afford to pass up."

Oh, no. Nope. Not so poor Neil "Silver Spoon" McAllister. This article stinks of arrogance.

So people are going to come online for the first time with a iPhone or Android? The "billions" being addressed here are going to be mobile users? They are not going to commute for access? In fact, how is the word "customer" being used? Or wait, "consumers"? Or does it matter?

I can clearly understand that the writer of this article (Neil McAllister.) is in no way poor or unprivileged, but who is his audience here? Who doesn't find those last couple lines completely ignorant? Half of this estimate of "billions" are most likely somebody who knew somebody starve to death, or has/had a family member killed by some form of militia.

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Re: "consumers" or "customers"?

Are you saying that people who are poor/oppressed should not be a marketing target for advanced mobile comms/data devices? If not, why not? Do you want them to be left alone in their poverty and oppression? Maybe they should be left as they are as an example to us rich folk for what can happen when things go wrong?

What are you saying and what do you actually want to happen?

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Flame

Re: "consumers" or "customers"?

I cant answer for the OP but I think that the poor and opressed have many other more important things to think about than possesing the latest smartphone.. Eating and remaining clothed might be a little further up the list....

Smartphones are non essential luxury items that are nice to have but they can just as easilly be forgotten. I remember when I used to actually speak to ther people when I needed i formation.......

Written on my Galaxy Note on the tram into work... I have already had a hot shower, coffee and breakfast.

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Facepalm

Re: "consumers" or "customers"?

Not everyone in the world has a standard of living which is either that of Somalia or that of Silicon Valley. There is some middle ground.

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Coat

Re: "consumers" or "customers"?

Oh, you mean the unemployed. ?

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Since when did Samsung make Dnapdragon CPUs? That would be Qualcomm...

...Get your facts straight and don't try to keep the Apple and Samsung inextricably linked in articles - it gets tiring!

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*Snapdragon even!

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It is partly true. TSMC make the lions share of snapdragon chips but Samsung are the second provider.

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I could possibly see something like this. Maybe. Perhaps.

The advantage would be that it gets people into the iOS ecosystem, some of whom will later become potential customers for the higher end iPhone, iPads, and whatever else they come up with. If everyone who can't afford an iPhone buys a cheap Android phone, when they can afford a high end phone they are more likely to choose Android even though they can afford an iPhone.

The disadvantage is that they don't want to tarnish their image of selling high end products, so I can't see them going too cheap. They wouldn't make a cheap plastic phone, I just don't see that. They could use the same body, perhaps altered to be a bit cheaper to make, and slightly thicker to save money by dropping the expensive and hard to manufacture in-cell matrix. Use a cheaper less accurate touchscreen matrix like most Android phones use, use their last generation (i.e. A6 if they sell it around the time the A7 is available) CPU. No LTE - perhaps no Edge, since I think that's mainly used in the US now and dropping it would make it less likely to be greymarketed into the US. Clock the CPU down a bit to allow using cheaper less power efficient components elsewhere in the phone without compromising battery life. Maybe even give it a LARGER battery, since in the less developed world perhaps nightly charging can't be relied upon if your power isn't reliable.

If they can get the cost down below $150 and sell it for $300 they'd be where they need to be. After all R&D and other costs that's in line with their overall corporate margin, though much less than their current iPhone margin. If they look at it as an investment in future growth that's a reasonable sacrifice to make, even if they do see some limited cannibalization of sales that would have gone to people who could afford the higher end model but decided the lower end one was "good enough".

The big problem is that they'd have to differentiate the "real" iPhone from this one. Not sure how, unless they decide to make the iPhone 6 larger since it seems as though the market has spoken and people want bigger phones (or maybe I only read about 5" Android phones and there are still plenty of 4" and under phones sold?) Only problem is, if too many people like the old size they'd buy the "low end" phone or keep their iPhone 5 as long as they could. Otherwise, they'd need some sort of killer feature introduced on the new one that people would be willing to pay for the high end model to get.

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Anonymous Coward

Re: I could possibly see something like this. Maybe. Perhaps.

Apple sells smaller cheaper devices also, they're called iPods. The iPod Nano and Shuffle.

Doesn't seem to have damaged their reputation.

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The fact is most people who do NOT buy an iPhone do it due to cost. Sure there are some die-hard Apple haters but if there were two phones with about the same spec and price - one was an Apple running iOS and the other was [someone else] running Android most people would pick the Apple one.

So a lower cost iPhone may help widen the user base but does risk eroding profits at the high end as based on the number of 3GS iPhones I still see a lot of people are still happy with a slightly less capable phone.

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The benefit Apple has is it's revenue stream is ongoing. Someone like HTC or Samsung sell an Android phone today and make very little (if anything) ongoing as you are then a Google customer. Apple sell you the phone and then all the apps / media for years to come so they are a bit more like Amazon in that they could suffer lower margins on the initial sale knowing they have future revenue coming in.

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Stop

Remember Instagram

Remember what happened when Instagram released an Android app.

Millions pissed-off iPhone users complaining that their private expensive garden was being sullied by poor people who couldn't afford iPhones.

Making a cheap iPhone will alienate the existing Apple cultists. And, obviously, produce less revenue per device. That's why I don't believe Apple would do it.

The classic fanboi argument is "it's not how many you sell, it's how much money you make selling them" and they criticize Android manufacturers for the Jack Cohen "pile 'em high, sell 'em cheap" philosophy. Their elitist squeals of betrayal might even be enough to sink Apple for the second time.

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@ Anonymous: Samsung sell an Android phone today and make very little (if anything)

Make very little? Samsung made USD$8-billion in the last quarter.

And, unlike the overpriced thing from Cupertino, Samsung owners don't have to buy Apps since they thoughtfully provide numerous, useful Apps.

I had to delete several, classy Apps from my Note 2 as I had no need for them. And I have an SD chip socket.

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Re: Remember Instagram

Agree totally. The only reason the iphone sells so well is the cache that the buyer belives they are buying into. By releasing a cheaper version they destroy the illusion of luxery. And in turn there whole marketing angle. I cant se them doing this, but if they do its more proof that we have past "peak apple".

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Anonymous Coward

"The fact is most people who do NOT buy an iPhone do it due to cost."

Tell us oh wise one, where do you get your "facts" from?

I'd get a refund if I were you. You should have realised that "fact" was bullshit from the smell.

If iPhones are so expensive and classy, why have all the Jeremy Kyle auditionees have one?

Because they are not the elitist symbol iowners make them out to be. Hardly surprising tho, after all it’s not difficult to pull the wool over their eyes, Apple has been butt f*king them for years.

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Anonymous Coward

Re: @ Anonymous: Samsung sell an Android phone today and make very little (if anything)

What BS the iPhone comes with plenty of built in apps and features and there are plenty of free apps you can add. As for overpriced a S3 is not really any cheaper - maybe a few quid less per month on a typical 18-24 month contract. If you are also going to play the overpriced card lets look at second hand value - people are selling 2 year old iPhones for more than half their 'new' cost so owning an iPhone is probably no more / possibly less expensive in the long run.

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Anonymous Coward

All the Samsung / Android users keep their phones well hidden out of shame.

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Anonymous Coward

Re: Remember Instagram

They were more likely objecting to the fact that a load of really bad pictures would start appearing, taken with the crappy cameras in low to mid range Android phones.

Photos such as Tux the Linux mascot, photos of the World of Warcraft poster on the wall, photos of their dorky mates at some live action role playing event and so on.

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Re: Remember Instagram

Photos such as Tux the Linux mascot, photos of the World of Warcraft poster on the wall, photos of their dorky mates at some live action role playing event and so on

You prefer pictures of sepia-toned hipsters and food then?

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Anonymous Coward

Re: Remember Instagram

Maybe Vertu can do a new downmarket version for them to buy instead ;)

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Anonymous Coward

The facts come from experience / speaking to people - pretty much every single Android owner I have spoken to either does not know what they have (just got it free as an upgrade), were given it by work (i.e. same reason) or could not afford an iPhone - but wanted one. For most users iOS is superior to Android (more secure / better apps) as most do not want to have to root it etc.

The number of people who actually describe their Android / other smartphones and tablets as iPhones or iPads is also quite high.

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The facts come from experience / speaking to people

I see your problem, AC. Those aren't facts, they're anecdotes. Learning the difference will help you a lot.

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Ongoing revenue stream is overrated

Apple recently reported that it has now sold 40 billion apps from the App Store and distributed $7 billion to developers. Given that they pay developers 70% and keep 30%, it is easy to calculate that they've cleared $3 billion from the App Store in the past nearly five years that it has existed. How much does it cost to run? That's a lot of bandwidth, a lot of servers, a lot of people doing reviews, a lot of people developing the developer tools, doing support, fixing bugs, and so on.

But let's say all that is free, and Apple cleared all $3 billion profit. And let's further assume because there are more iOS devices out there that even though that profit occurred over nearly five years, that in 2012 they made a third of it, or $1 billion. A lot of money, right? Well, Apple will have made about that much profit each WEEK in the fourth quarter of 2012.

The ongoing revenue stream is nice, but it is comparable to having your boss buy you lunch once a month when compared to the money Apple makes from hardware sales. The big win in increasing the iOS installed base is that iPhone owners are overwhelmingly likely to buy iPhone again when upgrade time comes. They'll make more money from one owner buying another iOS product at any point in the future than they are likely to make from all the app purchases he'll do in his entire lifetime.

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@A n o n y m o u s

How do you figure that? Every last one of the twenty or so people I know with an Android phone or tablet bought it because they wanted an Android phone. The don't "hate" Apple - well apart from one or two - but they had looked at what was available and concluded that an Android device was a better fit for their needs. They all bought top-end devices, too, so price was not one of the major factors in their decision.

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Re: @A n o n y m o u s

That surprises me when a lot of the Android phone users I know do not even really know what Android is - they got the phone as a contract upgrade. Many do not even have data tariffs and have never downloaded (let alone bought) any apps or music.

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Re: Ongoing revenue stream is overrated

Amazon better hope ongoing revenue stream works as they sell the devices pretty much at cost so rely on it. You also overlook the fact that apps are just one (probably small) part - many are 'free' - what about books, music, films (both rented and purchased), tv programs and subscriptions?

"The big win in increasing the iOS installed base is that iPhone owners are overwhelmingly likely to buy iPhone again when upgrade time comes"

... and that is a massive benefit - Apple sell an iPhone today then in about 2 years they probably have about an 80%+ chance (based on some of the surveys I have read) you will buy another iPhone. The old iPhone is still valuable / useable and I'd say a much higher proportion get new owners = building the user base.

People are not as 'loyal' even to Android let alone a single manufacturer like Samsung. It's like most other things they make - I own a Samsung TV - it's ok but nothing that special either - if / when it breaks I would just as easily buy a Sony, Panasonic, LG or ???

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Re: @A n o n y m o u s

Most of them are pretty technical people, so they knew what they were getting. That was the reason they all chose Android, you can make it jump through hoops that iOS just won't. The flexibility of the OS and the superior hardware in the top end devices were the key features.

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'phenomenal' sales

So 2 million sales in 3 days in China is 'less than 1% market penetration' and 'hardly phenomenal'...

...but 5 million sales in the USA and Europe (0.6% market penetration in a market where GDP is 4 times that of China) - phenomenal?

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WTF?

Re: 'phenomenal' sales

There are less people in US and Europe than in China, yet they bought 2.5 times more phones. How could the penetration be lower?

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New iphone factor?

Bollox to that.

Just break out the old tooling for the 3G(S), and bingo, job done. Saves on R&D and new product costs, can be fired up in a few months, can be provided cheapy and would not detract from sales of existing 4S/5 sales in the developed world (who are unlikely to want the old model).

Only thing Apple need to actually think about would be "allowing" iOS6 to run on the older hardware.

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Re: New iphone factor?

Yes, make something that is a revamped iPhone 3GS, perhaps called the iPhone 3X or something, basically the same but with the internals cost-reduced and maybe a slightly better CPU. And of course the new dock connector! Non-retina screen, plastic back, 8GB limit, cheap-as-chips (relatively)

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Re: New iphone factor?

Agreed, apart from the 3GS in my hand already does run iOS6 very happily, ta.

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I smell a new court case

Doesn't HTC have a patent on cheaper versions of flagship phones?

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Anonymous Coward

Samsung must be worried as they compete with Apple at the high end but Apple do not really have a low end phone (unless subsidised by relatively expensive cell contracts). An updated 3GS would be good and cheap to make and plenty of people are still perfectly happy with their 3GS handsets. Could take away a lot of the low-end Android purchasers leaving the ultra cheap handsets for PAYG or the many people who have an Android but no data plan.

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Coffee/keyboard

I laughed so hard

"Apple has made a name for itself by marketing high-end gadgets to affluent, design-conscious consumers"

....but were purchased by every pikey chav boi in the UK. (and there's millions of them)

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Re: I laughed so hard

Indeed, my plumber has one, because someone told him down the pub it's the best phone in the world.

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Anonymous Coward

Re: I laughed so hard

Here's hoping he washes his hands a lot ;)

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It's all about iTunes, the App Store, the iBook store.......

In simple terms, every pound spent on Google Play is a pound not spent on Apple, and that amounts to quite a lot. If Apple is to maximise shareholder value, it needs to reduce the cost of entry to iWorld.

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Anonymous Coward

Re: It's all about iTunes, the App Store, the iBook store.......

Not really if the market is growing - i.e. there are more users for both.

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Anonymous Coward

Samsung should be worried - cheaper iPhones and competition from Google / other Android makers. No one gives a fig that they have a Samsung phone - I have a Samsung microwave (I think) - no one cares - next time they will buy HTC, Asus, Sony, Motorola or whoever. HTC fell pretty quickly - Samsung could easily do the same and they have screwed over their largest customer.

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404
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Optional Theory

I don't know how many outside the US know about the Obamaphone program here in the States - apparently cell phones are now a human right and the 'poor' can get free cell phones with 250minutes, 250 texts per month. All paid by a $10 surcharge per line on every person who actually pays for their phones.

Now this program has pretty much no financial or any verification and I know this because I have an acquaintance with five of the damn things - the latest a Samsung smart phone. Smart. Phone. I ask how can this be? He tells me they will be getting a limited data plan soon. (Also tells me how he's entitled to sit and let the feds take care of him, but that's a whole other can of worms - getting ugly IMO).

Still with me?

Ok, so if Apple can come up with this low cost iPhone for the masses, they will have a US Government customer with millions of potential sales that they can tap right here.

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Re: Obama Phone?

Is that Obama Phone as in the fake, racist, tea party ad created to undermine Obama?

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Boffin

Re: @404

Bullshit:

http://www.snopes.com/politics/taxes/cellphone.asp

Does no-one check their facts any more?

GJC

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Anonymous Coward

Re: Optional Theory

Some people are like sponges and suck up anything they are told and proclaim it as fact.

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Boffin

Re: Optional Theory

The Internet does seem to be particularly good at conferring erroneous credibility by exponential repetition. I'm training our girls to question everything, the way things are going they should be able to take over the entire world in about 15 years.

GJC

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Anonymous Coward

Re: Optional Theory

Have they said "are you really my dad" yet? Lol.

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404
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Ouch!

Just rhetorically asked my wife, "I wonder how my post did today, I was thoughtful". ->internet bitchslap<- <rubs welt on face>

Standing by it though.

This isn't something I just pulled out of pure ozone, I personally have my Verizon bills for reference on the $10/line and I truly interact with the acquaintance mentioned. I call it Obamaphone because of the meme of that very term. I happen to require mindless entertainment after some harder than usual network/server/workstation issues with memebase.com, cheezburger etc. Apple making a low-cost iPhone would make an excellent market penetration if they so desired and that particular market is worth billions, ask the richest man in the world - he owns one of the corporations that has the Federal contract.

The only people who are blind are the ones who do not follow the money, who profits? Ideology is fine, but who is cashing in on it is very important.

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