How low will Apple go on the iPhone 5C?

Analysts peg unsubsidized price between $340 and $400 for Apple's expected new lower-priced iPhone

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But while Marshall forecast a $339 unsubsidized price, Singh thought that was too low, even though in January he pegged the likeliest price between $299 and $349.

"I'm beginning to think that the price we're talking about is actually at the low-end of the potential range," Singh said in an email reply to questions. "If the low-cost device and iPhone 5S are launched in all markets -- very likely -- it would mean that Apple would have to discontinue the iPhone 4 [which has an unsubsidized price of $450], the iPhone 4S [$550] and possibly the iPhone 5 [$650]."

Apple, said Singh, has two problems: First, competing with inexpensive Android devices in unsubsidized markets, and second, minimizing revenue losses in subsidized markets, which are Apple's most important. But by going low in the range -- say $339 -- Apple risks accomplishing neither.

"The primary competition in unsubsidized markets is at or below $200, while in subsidized markets it's above $450 or $500," Singh noted. "So coming in at $339 to $349 risks losing revenue in subsidized markets without making comparable gains in Asia. [So] I wouldn't be entirely surprised to see a price as high as $399."

Milanesi was also convinced that Apple wouldn't reach for an under-$300 price, but instead said the Cupertino, Calif., company would list the iPhone 5C at $350 to $400.

But would that be low enough? Milanesi thought so.

"A mid-range device like this would be about half the price of what Apple is selling today," Milanesi said, referring to the iPhone 5, and the future iPhone 5S, which is expected to have the same non-contract price. "Three hundred dollars is a heck of a lot in emerging markets, and we do think it will open up an addressable market."

Gartner's future forecasts are based on sales of 10 million iPhone 5Cs during 2013's final quarter.

Milanesi said the assumption was that the iPhone 5C would cannibalize sales of the top-tier iPhone 5S to the tune of 30%. In other words, if Apple sold the 10 million iPhone 5Cs that Gartner anticipates, only 7 million would be additive; 3 million would have come at the expense of iPhone 5S sales.

Gartner's cannibalization estimate was close to that of Gene Munster, an investment analyst with Piper Jaffray, who recently halved his cannibalization factor from 50% to 25%.

Apple will dump the iPhone 4 and iPhone 4S from the lineup, Milanesi said, but retain the iPhone 5 to keep its three-model tier in place.

"The new low-cost iPhone is crucial to the Apple story," said Marshall, who added that an iPhone 5C was "imperative" for the company to grow its international market share and gross margins.

This article, How low will Apple go on the iPhone 5C?, was originally published at

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is

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