Low-end iPhone might cost up to $150

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Published time: January 10, 2013 12:43
Edited time: January 10, 2013 16:43

Apple is going to launch a smaller, cheaper version of the iPhone as soon as this year to gain a foothold in developing markets, and the price tag will reportedly be between $99 and $149.

The new smartphone would be approximately a third the price of current models costing $650 without a contract in the US, Bloomberg reported, citing a person familiar with the matter. It is expected to reach the retailers in late 2013. The smartphone would be smaller than current models and would be made from cheaper parts.

The company has been cherishing the idea of budget iPhone since February 2011, the source said. The new product is expected to boost Apple’s sales in emerging markets, helping the US company to rival Korean producer Samsung Electronics.

Samsung and other smartphone makers that use Google’s Android mobile software system made up 75% of sales in the third quarter, compared with 14.6% for Apple, according to the ID market research firm. Samsung share rose from 8.8% to 31.3% from the third quarter of 2010 to the third quarter of 2012. Meanwhile, Apple’s share was down from a peak of 23% in the fourth quarter of 2011 and the first quarter of 2012.

The iPhone generated $80.5 billion in sales last year, accounting for more than 50% of Apple’s revenue.

Slumping sales have caused concern that a high price tag could hamper Apple’s expansion abroad. However, CEO Tim Cook stressed that Apple’s focus on product quality trumped other issues.

Launching the budget version of the iPhone would be a strategy shift for Apple as it turns an eye on developing markets, experts say. China is one of the priority markets for Apple, according to CEO Tim Cook. Chinese consumers brought $5.7 billion in sales to Apple in the quarter ended in September.

Earlier the major Russian mobile phone operator MTS slammed Apple for its ‘too’ strict sales policy by not allowing a cut in the device’s $1,000-plus price tag in the country. The iPhone’s high cost makes them a hard sell in the Russian market where rival models can be purchased for as little as $120, according to MTS. Apple’s strict requirements on retail locations bring additional costs.