Pegatron CEO confirms Apple's not so 'cheap' iPhone mini

In a move that will hit Samsung in the wallet, Apple [AAPL] is preparing to introduce a low-cost iPhone nano/mini/light, confirmed Pegatron's CEO this morning -- but these things won't be "cheap" he warned.

iPhone nano confirmed

[ABOVE: Might this be the iPhone mini? A product idea rendering from Nickolay Lamm and MyVoucherCodes.co.uk.]

Pegatron confirmation

Pegatron CEO, TH Tung, told shareholders that while the much-anticipated smartphone will indeed be cheaper than the full-strength iPhone, it won’t be "cheap." This device will be aimed at the more profitable mid-range of the market, leaving Android device makers to scratch for their cash in the low-end markets.

Apple's plans for a lower cost iPhone aren't being deployed in such a way as to devalue its overall product experience with a device that's cheap as chips. CEO Tung did tell us that while the much speculated upon but still unicorn-elusive iPhone model will be cheaper, "the price is still high", as reported by the China Times.

So, I hear you think: hold on a moment, how would this guy know this about Apple's plans?

The reason is Pegatron has reportedly been contracted to handle some or all of the manufacture of these new models, and is looking to hire around 40,000 workers to help make these things.

So why is the Pegatron top brass sharing these plans?

40,000 hires constitutes a pretty significant increase in the company's staff budget:  Shareholders have a right to know why staff costs will inevitably rise in the current quarter even though money won't start flowing into Pegatron's vaults until these things ship, most likely in Fall.

It makes sense to think Tung told shareholders about the deal in order to convince them there's a few dollars to be made churning out the new devices.

It would be financially irresponsible not to disclose a little of the detail to investors.

The other take away of course is that this is the strongest confirmation we've seen yet that the chimera of the cheap-but-not-cheap iPhone model is about to become real.

This year, next year

If the China Times is correct in what it has claimed, then it seems absolutely certain Apple will ship the rumoured iPhone mini, most likely (though not necessarily) this year.

What do we know about it? Well, not a whole bunch, but we think:

Brian White at Topeka Capital believes the launch of an iPhone mini is "imminent" and that the device will be available in five colors and cost around $350-$400. The current edition iPhone costs around $600.

This new model might ship in Q4 -- though I think it unlikely to hit market in the same time period as the iPhone 5S, so I'm equally prepared for a 2014 launch.

"We think Apple will have to launch an 'iPhone Mini' at some point over the next three years to address the hundreds of millions of prepaid users worldwide that cannot afford the current iPhone," said Neil Mawston, executive director at Strategy Analytics last year.

Mawston originally expected the device to ship in 2014, and I must stress that in my opinion this remains a possibility despite the utterings of Pegatron's CEO.

Despite that caveat I fully expect the usual predictable "iPhone mini delayed" FUD reports from news sources, journalists and others who really should know better in the months before the actual product is announced, released or confirmed.

This is unlikely to impact Apple's future success with the product as it widens its market to include mid-range smartphone purchasers. It just means those who already want an iPhone will find it easier and a little cheaper to wrap their hands around one. Others in this segment will undoubtedly be impacted by the launch of the new device.

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