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Apple planning budget iPhone to boost share of Asian market
[January 10, 2013]

Apple planning budget iPhone to boost share of Asian market

(Guardian (UK) Via Acquire Media NewsEdge) Apple is reportedly developing a budget version of the iPhone that could cost half as much as its latest handset, in an attempt to push back against arch-rival Samsung and increase sales in Asia.

With competitors producing touch-screen devices for under $100 (pounds 62) without subsidy, analysts say that to make an impact Apple would need to price its budget model at around $300, half the price of the latest iPhone.

Scheduled for launch in the second half of this year, according to manufacturing sources, a second model would mark a major shift in strategy for Apple, which has produced just one iPhone handset design a year since it first appeared in 2007.

The prototypes have a larger display than the iPhone 5, according to manufacturing news site Digitimes, and could feature a less expensive body, possibly made of plastic rather than aluminium.

Last year saw the arrival of touch-screen smartphones from ZTE, Samsung and Lenovo that cost less than $100, a development that will push annual sales of what are in effect miniature computers to the 1bn mark for the first time in 2013, according to accountants Deloitte.

With emerging markets such as China and India expected to generate a large proportion of those sales, Apple must now decide whether to risk lower profit margins, and devaluing the brand of a device that accounts for almost half its revenue, by pushing for a share of the budget smartphone boom.

"Apple is fast approaching a fork in its global strategy for the iPhone," said Neil Mawston at researcher Strategy Analytics. "Apple needs to decide whether to continue with its current strategy of one-model-one-segment, or whether it needs to expand into multiple models and multiple segments." An Apple spokesman declined to comment. Lower cost but high performance phones, many of which use Google's Android software, have bitten into Apple's global market share, which fell from a peak of 23% at the end of 2011 to 15% in the third quarter of last year, according to researcher IDC.

Samsung's growth hinges on its high cost Galaxy SIII, but it has blitzed the market with 37 different smartphone models in 2012, each adapted to local tastes and budgets. The result was a leap in global market share in the third quarter of 2012 to 31% from 9% in 2011. The iPad mini, a cheaper and smaller version of the tablet computer, could point the way for the iPhone.

(c) 2013 Guardian Newspapers Limited.

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