What The Leaked Apple Inc. (AAPL) iPhone Means

Using search engine data provided by Google, we can conclude Research In Motion Ltd (NASDAQ:BBRY)’s relevance in the U.S. has dwindled to near multi-year lows. Should the only positive business segment, emerging markets, get hurt as a result of increasing competition from a cheaper iPhone, I would expect losses to accelerate.

While Samsung is diversified across almost every consumer category, smartphones sales have powered earnings growth and estimates in recent years. Samsung’s gross margins are already significantly lower than those of Apple Inc. (NASDAQ:AAPL), 14%. Should a lower priced iPhone start to compete with the similarly priced Samsung phones, expect increasing competition and incentives from both sides.

The manufacture which leaked the new designs actually did compare the product to outstanding Samsung designs. They concluded the feel and stability of the iPhone outperformed that of Samsung’s line of devises.

Wrap up

A lower priced iPhone could open up a huge consumer base, both domestically and internationally, for Apple Inc. (NASDAQ:AAPL). The fears of drastic gross margin contraction may be over blown as it is highly unlikely current iPhone users will trade down during the next refresh cycle. By offering the lower price option, Apple can pull in consumers in the emerging markets which have typically stayed away from the high price point associated with iPhones. I feel both Research In Motion Ltd (NASDAQ:BBRY) and Samsung could feel gross margin pain of their own as competition increases.

Nathaniel Matherson has a long position in Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL).

The article What the Leaked iPhone Means for the Competition originally appeared on Fool.com.

Nathaniel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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