Cheap Apple iPhones: Over the past couple of days, there has been a lot of buzz surrounding the possibility of Apple Inc. (NASDAQ:AAPL) offering a low cost iPhone in emerging markets. If you are looking for some background information and a basic rundown of what has been going on, visit our article from yesterday: Apple Inc. Considering an ‘Affordable’ Smartphone?
Although rumors are quite common when it comes to Apple Inc. (NASDAQ:AAPL), there are a lot of people – including those with plenty of knowledge – who feel that this is nothing more than a matter of time.
For example, Gene Munster of Piper Jaffray feels that there is a very good chance a low-cost iPhone could hit the market as early as 2013.
Here is some more information on pricing, from an article published on AppleInsider:
“Gene Munster of Piper Jaffray believes there’s a good chance Apple will in fact release a new low-cost iPhone model this year. Unlike new reports that have claimed the device could be priced between $99 and $149, he expects Apple will charge around $199 for a new unsubsidized iPhone.”
As you can see, this price point would be a huge discount as compared to what the company currently offers.
Munster has even more thoughts on this topic, as the AppleInsider article goes on to explain:
“Current iPhone models have gross margin between 55 and 60 percent, aided by carrier subsidies. Munster believes that Apple’s contract-free iPhone with a price around $200 would instead have gross margins around 30 percent.”
“He also believes that a cheaper iPhone would be a popular option in Apple’s lineup: Munster’s sales forecast for the end of 2013 calls for 30 percent of all iPhone sales to be the rumored lower-price model.”
“Accordingly, he sees the average selling price of the iPhone falling from its current level of around $640 to about $520.”
With Apple Inc. (NASDAQ:AAPL) having success with other lower priced products, such as the iPad Mini, it is easier to see why the company may consider something like this for emerging markets. According to Munster’s numbers, Apple would stand to make good money on this decision. Here is a closer look: