Analyst pegs 'iPhone Mini' price at between $299 and $349
Roughs out possible cost to make lower-priced iPhone aimed at emerging markets and as counter to possible carrier revolt over subsidies
Computerworld - Apple may be able to build a cut-rate iPhone for $144, which would let it price the device between $299 and $349, hundreds less than the unsubsidized price tag of its flagship smartphone, an analyst said today.
A lower-cost iPhone would be a major strategic shift by Apple, which has rigorously held the price line, and may signal that it believes real growth will be found only in emerging markets, said Sameer Singh, who covers the mobile industry at his Tech-Thoughts blog.
"I think the primary driver would be their position in emerging markets," said Singh in a Thursday email reply to questions.
In a Jan. 14 post, Singh assembled a rough estimate of what it might cost Apple to assemble a lower-priced iPhone. His total, including manufacturing costs, came to $144.03.
By comparison, other BOM calculations by the likes of IHS iSuppli have pegged the BOM, including manufacturing, of the lowest-priced iPhone 5 at $207, indicating a 30% reduction in Apple's cost if it did pull the trigger on a less-expensive smartphone.
Singh made numerous assumptions about the hypothetical handset -- which he, like others, tentatively dubbed "iPhone Mini" in a sop to a frequently-used Apple naming convention -- including a 3.5-in. display, 8GB of storage space, the same processor and camera as used in the successful iPad Mini, a plastic rather than metal case, and the omission of support for faster LTE, or 4G, data networks.
"This is not a BOM estimate nor my prediction of the iPhone Mini's cost structure, but a rough estimate of how far Apple could realistically bring down product costs," Singh wrote in the Monday post.
Many of his component assumptions were based on the idea that Apple would reuse parts it has worked with in the past, such as a 3.5-in Retina screen -- last used in the iPhone 4S -- and the A5 system-on-a-chip (SoC) found in the iPad Mini.
Using the rough cost estimate, Singh then ball parked suggested list prices by determining various profit margins. He assumed that Apple would not surrender its historically high margins for such a phone, just as it did not when it created and priced the 7.9-in. iPad Mini tablet.
"After the launch of the iPad Mini, we can safely say that Apple will not compromise on margins and will price its products at a premium even at the low end of the market," Singh said.
The likeliest retail prices were $299 and $349, which would deliver margins ranging from 52% to 63%, close to, but not equal to, the 68% margin Apple collects on the iPhone 5.
Analysts have argued that Apple needs a lower-priced iPhone to compete with the hard-charging Samsung, and to keep its growth in line with Wall Street's expectations by broadening the potential pool of buyers.
Carriers in most emerging markets, China being at the top of the list, are resistant to paying Apple the large subsidies for the top-of-the-line iPhone -- which comes with a suggested retail price starting at $650 -- and so a cheaper model would presumably be more likely to sell well in those locales.
- Apple has bigger plans than just song ID with Shazam deal
- Automakers show off in-vehicle Wi-Fi, new smartphone interfaces
- First-to-market means diddly when it comes to smartwatches
- Apple slates WWDC for June 2-6, sets up ticket lottery
- Nadella to Cook on Office revenue sharing: Drop dead
- Microsoft scraps 'Windows-first' practice, puts Office on iPad before Surface
- iOS tops Android for Web browsing in U.S. and other developed nations
- Microsoft's free OneNote vaults to top of Mac App Store chart
- Apple discounts iPhone 5C 8%-9% in five markets via storage cuts
- Microsoft's OneNote strategy: Battle Evernote, or something bigger?
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Smartphones White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!