The market’s been rotating back into shares of Apple Inc. (NASDAQ:AAPL) after months of neglect, and clearly anticipation is building for the new iPhone that will undoubtedly be introduced on Sept. 10.
Will we get a gold-colored device? Is Apple Inc. (NASDAQ:AAPL) really going to include a fingerprint scanner on the home button? Do we really want a cheap and plastic entry-level iPhone?
Now, there’s little reason to get excited about gold- or champagne-colored iPhones. Don’t most people simply slap a protective case on the defining mobile device that snuffs out the shell? Fingerprint sensors may also sound cool for security-hungry iFans, but it’s not as if other gadgets with added layers of security have fared all that well in the past.
This brings us to those cheap plastic iPhones that no one seems to care about. Investors don’t like them because they will naturally hit the market packing lower margins. We’ve seen Apple Inc. (NASDAQ:AAPL)’s margins contract in recent quarters, and this isn’t likely to spell salvation on that front.
However, the cheaper iPhone may be the biggest thing that the market sees out of the comeback kid of Cupertino in three weeks. It could be a game changer, and investors need to look beyond the margin contraction and the lower average selling prices.
Apple Inc. (NASDAQ:AAPL) needs this in a bad way.
Yes, iPhones seem to be the only product growing in unit sales these days for the tech bellwether, but even there Apple Inc. (NASDAQ:AAPL)’s losing market share. Gartner Inc (NYSE:IT)‘s recent study shows Apple’s chunk of the worldwide market has contracted from 19% to 14% over the past year.
A cheap iPhone changes that. A cheap iPhone that has features currently being offered by similarly priced rival products — instead of just offering a two- and three-year old iPhone model at $100 and $200 off, respectively, makes Apple Inc. (NASDAQ:AAPL) trendier.
Folks like to save money, and that’s made Google Inc (NASDAQ:GOOG)‘s Android a major beneficiary. When folks keep buying iPhone 4 and iPhone 4S models instead of paying for the iPhone 5 — and earlier this year, at least one major carrier reported that only half of its iPhones sold were the latest model — savings supersede newness.