Update 2: Reuters withdrew the story about Phil Schiller comments: so the rumors still stand.
Update: Apple SVP of Worldwide marketing Phil Schiller denied Any plans to produce cheap iphones.
“Despite the popularity of cheap smartphones, this will never be the future of Apple’s products.”
our Article will be left intact below, the stat and analyses are always accurate:
Some rumors have been circulating for some time, and they were lately reported by the Wall Street Journal, that Apple is planing to produce a low end mobile phone, these are still rumors even though Apple did indeed plan to produce a low end cheap iPhone in the past (the plan was later shelved).
What changed, to push Apple into producing cheap iPhones?
1- Market share: Apple is loosing market share rapidly, for instance in 2011 23% of the 4th quarter smartphone worldwide sales were iPhones, in 2012 the figures dropped to only 14.6%.
2-Price/Quality of competition: In the past (prior to 2012), Apple had the best quality and the competitors were seen really far behind, but since, the competing handset (Samsung, HTC, Nokia…) makers have stepped up their game, and some handsets are of very high quality, even some people go as far as saying better quality. The cheaper competition high quality products, have been increasingly reducing the iPhone sales especially the Middle-high end customers.
3-Better Android OS and rapid growth: In the 2nd quarter of 2009 Android was powering only 2.8% of smartphones, by the 3rd quarter of 2012 Android got a 75% share of smartphone operating systems (with 50% of these are operating lower end devices that run the older OS version 2.3 Gingerbread ). With new Android features like Google Now that competes with and outperform Siri.
4-Apple store VS. Google Play: On the long run, if iOS share keep dropping down compared to Android, that would influence the Apple store, developers would put more importance and priorities producing a mobile App for Android phones than for iPhone, which will lead to an even bigger market share loss for Apple.
Why Apple haven’t reacted sooner? and how will the low end iPhones look like?
Former CEO Steve Jobs, business model was prioritizing profits over scale thus offered a very small number of products targeted at the high end. Apple new CEO Tim Cook (since August 2011) has a different approach that consist of competing on the high and low end products, this can be noticed with Apple launch in October of iPad Mini.
A low end iPhone would be built most probably with the standard smartphone materials, polycarbonate plastic shell instead of glass (iphone4/4S) or aluminum casing (iphone5), standard touch screen instead of the high quality retina display, less powerful integrated camera, less powerful processor and smaller storage capacity.
Would it be a successful?
It most probably would be a success, but that will reduce the profit margin and would probably reduce the number of high end handset clients that would go for the lower end version.