Analysts are coming into the conclusion that it may just be best for Apple to launch a cheaper iPhone in the future.
Morgan Stanley analyst Katy Huberty wrote that a cheaper iPhone is likely to happen as soon as this summer. Huberty's conclusion comes after meeting with Apple Chief Financial Officier Peter Oppenheimer.
Although the specific details of Huberty's meeting with Oppenheimer have not been disclosed, the Morgan Stanley analyst noted a few reasons why a low-budget iPhone would work for the Cupertino-based company:
"1. iPad Mini is expanding Apple's customer base with 50 percent of purchases in China/Brazil representing new customers to the ecosystem.
2. Chinese consumers show a desire to purchase the latest version of iPhone (instead of discounted older generations).
3. iPhone 4 demand surprised to the upside in the December quarter. Even at a low 40 percent gross margin and 1/3 cannibalization rate, we see an "iPhone Mini" as incremental to revenue and gross profit dollars."
Huberty's conclusion comes after Latinos Post reported about Piper Jaffray analyst Gene Munster stating a lower priced iPhone is in the works. He noted that an iPhone priced between $199 and $249 could make its debut in the September quarter.
Munster also noted the success the low budget iPhone should have in China, as well as India.
"In those two core markets, the iPhone 4 is priced an average of [about] 265 [percent] higher than the average smartphone. Munster believes that the emerging markets are where Apple needs a lower priced product most and may launch the product specifically in those markets and not in markets like the US," noted ValueWalk.
If the "iPhone Mini" was to launch this year, Apple's gross profit margin could decline by two percent yet in return boost the Cupertino-based company's iPhone business by approximately $2.4 billion in gross profits.
Source: Ubergizmo
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