Barely a day goes by where an analyst doesn’t have their say on Apple’s future products. The talk of the town so far this year is the supposed low-cost/budget iPhone. In the mind of every single analyst out there, the budget iPhone is something Apple has to release – or else Android phones will completely dominate the emerging markets in countries like China and Brazil.
The latest to spout off on the subject is Walter Piecyk, who believes Apple would be “stupid” not to release one, based on pure “basic logic”. He estimates that Apple could sell just over 36 million low-cost iPhones in 2014, generating $11 billion in revenue.
“We believe a product that addresses the more than 70 percent of global wireless subscribers that are unsubsidized pre-paid is necessary in order for Apple to grow its EPS next year. This is not rocket science and our belief is based on basic logic, not questionable ‘channel checks’ or trips to Asia.”
Emerging markets abroad are something we don’t fully appreciate here in the West. Across the waters in other countries, many consumers are having to pay non-subsidized prices for smartphones. And with the current market leaning more toward smartphones, there’s only Android devices within the “budget” price range. The cheapest iPhone is the 4th generation model, and even that costs $450. The iPhone 5 has a $650 premium attached to it, whereas cheap Android phones will often cost around the $200 mark. There are no prizes for guessing which the budget conscious consumers are going for there.
While a budget iPhone definitely makes sense fiscally, I do worry that analysts are forgetting Apple’s mentality of building products because they’re great, not because they’re cheaper. Case in point: the iPad mini. Apple took cut a huge chunk off its normal profit margins to bring that down to the $329 MSRP. It’d cost the same as the iPad 2 if it kept the same margins.
My point really is that I’m always skeptical when analysts predict anything. I don’t care how reasonable it sounds, they don’t have any inside information, and they’re just basing their decisions on what the market looks like and what they think makes sense. Forgetting completely the mentality at 1 Infinite Loop.
What do you think? Will Apple release a cheaper iPhone?