Report: Apple may build less expensive iPhone
SAN FRANCISCO (AP) - Apple is trying to decide whether it makes sense to offer a cheaper iPhone as it tries to boost sales in less-affluent countries and reclaim some of the market share lost to cheaper phones running Google's Android software, according to a published report.
Wednesday's report in The Wall Street Journal speculated that Apple could lower the iPhone's price by equipping the device with an exterior that costs less than the aluminum housing on current models.
A cheaper iPhone could come out as early as this year, or the idea could be tabled for future consideration, as has previously happened. Citing unnamed people familiar with the matter, the Journal said Apple began assessing the pros and cons of making a cheaper iPhone in 2009 and has periodically revisited the notion. Apple Inc. declined to comment to The Associated Press.
Apple so far has stuck with an approach that has stamped the iPhone as the gold standard, a device that warrants a higher price than other smartphones. Under this tack favored by Apple's late CEO, Steve Jobs, the company sells a premium-priced iPhone that has been updated annually with new features since its 2007 debut.
In an attempt to appeal to more budget-conscious consumers, Apple has been selling older models of the iPhone at discounts before phasing them out.
The latest iPhones start at $199 in the U.S., but those prices are subsidized by wireless carriers, which figure they can make up the costs through monthly service fees over the life of a two-year contract.
The unsubsidized prices start at $649. That is proving to be too much for many people looking to stay connected on the go, prompting them to snap up more affordable smartphones, including Android devices made by Samsung Electronics Co. and others. Google Inc. doesn't charge for the Android mobile operating system, making it easier for device makers to undercut the iPhone. Apple doesn't allow rivals to use the iPhone's iOS operating system at all.
Android devices accounted for 75 percent of smartphone shipments during the three months ending in September, up from 58 percent at the same time in 2011, according to the research firm IDC. The iPhone's share stood at 15 percent in September, up from 14 percent in the previous year.
Google says more than 500 million Android devices have been activated since the software's release four years ago. By comparison, Apple had sold about 271 million iPhones through last September.
Apple could fall further behind as it focuses more on markets outside the U.S. and Europe. That's because many households in some of the most promising markets, including China, can't afford iPhones at their current prices. Apple CEO Tim Cook, who took over the helm shortly before Jobs died in October 2011, is currently visiting China.
"The Western markets are saturated and Apple has to look at emerging growth markets and develop a product that meets the demands of the region and affordability," said N. Venkat Venkatraman, chairman of the Information Systems Department at Boston University's school of management.
Under Cook's leadership, Apple already has deviated from Jobs' philosophy by selling less-expensive versions of its products. Late last year, Apple introduced a smaller model of its iPad. The iPad Mini sells for $329, or about a third less than what the latest full-size iPad starts at. Even so, Apple is still charging $80 to $130 more for the iPad Mini than similar-sized tablets, including Google's Nexus 7.
Analysts are divided on whether a cheaper iPhone would be good for Apple. Some believe Apple needs to expand the choices to preserve market share and sustain revenue growth. Others fear a less-expensive iPhone would siphon sales from the premium model and diminish the company's profit margins. That same concern raised by the recent introduction of the iPad Mini is one of the reasons that Apple's stock price has fallen 26 percent from a peak reached in late September, just as the latest iPhone went on sale.
Apple's stock fell $8.21 Wednesday to close at $517.10.
The iPhone and related products generated $80 billion in sales during Apple's last fiscal year, which ended in September. It accounted for more than half of the Cupertino, Calif., company's total revenue.
Wednesday's report in The Wall Street Journal speculated that Apple could lower the iPhone's price by equipping the device with an exterior that costs less than the aluminum housing on current models.
A cheaper iPhone could come out as early as this year, or the idea could be tabled for future consideration, as has previously happened. Citing unnamed people familiar with the matter, the Journal said Apple began assessing the pros and cons of making a cheaper iPhone in 2009 and has periodically revisited the notion. Apple Inc. declined to comment to The Associated Press.
Apple so far has stuck with an approach that has stamped the iPhone as the gold standard, a device that warrants a higher price than other smartphones. Under this tack favored by Apple's late CEO, Steve Jobs, the company sells a premium-priced iPhone that has been updated annually with new features since its 2007 debut.
In an attempt to appeal to more budget-conscious consumers, Apple has been selling older models of the iPhone at discounts before phasing them out.
The latest iPhones start at $199 in the U.S., but those prices are subsidized by wireless carriers, which figure they can make up the costs through monthly service fees over the life of a two-year contract.
The unsubsidized prices start at $649. That is proving to be too much for many people looking to stay connected on the go, prompting them to snap up more affordable smartphones, including Android devices made by Samsung Electronics Co. and others. Google Inc. doesn't charge for the Android mobile operating system, making it easier for device makers to undercut the iPhone. Apple doesn't allow rivals to use the iPhone's iOS operating system at all.
Android devices accounted for 75 percent of smartphone shipments during the three months ending in September, up from 58 percent at the same time in 2011, according to the research firm IDC. The iPhone's share stood at 15 percent in September, up from 14 percent in the previous year.
Google says more than 500 million Android devices have been activated since the software's release four years ago. By comparison, Apple had sold about 271 million iPhones through last September.
Apple could fall further behind as it focuses more on markets outside the U.S. and Europe. That's because many households in some of the most promising markets, including China, can't afford iPhones at their current prices. Apple CEO Tim Cook, who took over the helm shortly before Jobs died in October 2011, is currently visiting China.
"The Western markets are saturated and Apple has to look at emerging growth markets and develop a product that meets the demands of the region and affordability," said N. Venkat Venkatraman, chairman of the Information Systems Department at Boston University's school of management.
Under Cook's leadership, Apple already has deviated from Jobs' philosophy by selling less-expensive versions of its products. Late last year, Apple introduced a smaller model of its iPad. The iPad Mini sells for $329, or about a third less than what the latest full-size iPad starts at. Even so, Apple is still charging $80 to $130 more for the iPad Mini than similar-sized tablets, including Google's Nexus 7.
Analysts are divided on whether a cheaper iPhone would be good for Apple. Some believe Apple needs to expand the choices to preserve market share and sustain revenue growth. Others fear a less-expensive iPhone would siphon sales from the premium model and diminish the company's profit margins. That same concern raised by the recent introduction of the iPad Mini is one of the reasons that Apple's stock price has fallen 26 percent from a peak reached in late September, just as the latest iPhone went on sale.
Apple's stock fell $8.21 Wednesday to close at $517.10.
The iPhone and related products generated $80 billion in sales during Apple's last fiscal year, which ended in September. It accounted for more than half of the Cupertino, Calif., company's total revenue.
hmmmmm, I'd bet apple could make the same phone but charge less and still make a profit.
Perhaps less expensive, but still overpriced.
 @Dredd57 No.  Everything else is underpriced.  Plastic just costs less.
 @cyclops  @Dredd57 Apparently you've never bought Apple accessories or an Apple computer. They are even more overpriced than Sony Vaios.
 @Dredd57 It depends on what you are testing.  Apple outshines in some areas...plus it comes out of the box with some nice software which comparably could add up to your $500.  When you clean your pc screen, notice how the dust gets pushed to the edges of the cheap plastic bezel?  And notice how on an iMac you just wipe the screen and there is no place for dust to collect because of the sleek design?  Some people appreciate that.  I have both..a sleek iMac and an ugly, noisy box with a plastic monitor.  They both work fine and just because the iMac  cost more doesn't mean it is over priced....it means it cost more.
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I know just as many people who have switched from Galaxy to iPhone so I don't know what point you are trying to make.Â
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Yes the prices of Apple branded accessories are ridiculous but you can get off brand  for half the price. Â
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The article was about the price of the iPhone not accessories. Â The Galaxy is the one that is over priced and Samsung is the one making more per unit so in reality it is the Galaxy buyers that are getting ripped off.
 @cyclops I have an ASUS computer with a few upgrades, I have about $500 less than my sister does in her Mac that she spent $2200 on. Mine destroyed her in both a speed test, CRC test, and also graphics rendering speed test. She is a big Apple fan too, that's how it all came about. Ironically, she had the I-phone for a week (I think the 3GS) and returned it. She has an HTC phone now.
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I have a Galaxy S3 myself, I paid $199 for it, same price as the I-phone 5 model. But I've never owned an I-phone before, so I couldn't tell you whether it was a better phone. I have many friends who got rid of their I-phones to get the Galaxy, which was the reason I got the Galaxy in the first place- peer reviews.
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The entire reason I say Apple is overpriced, is I used to work in an electronics store, and I saw just as many Apple computers come in for repair as I did everything else with the exception of Acer and Toshiba, those are total piles of crap. The Apple PC's were always nearly twice the price of everything else, around 40% more. But the most absurd prices were the accessories. We had an Apple phone charging cable that cost $32, when typical cables were $10-$20.
 @Dredd57 Yes I have an iMac and it is so much nicer than my plastic pc.  I like well designed high quality products and I think they are worth the price in most cases.  I tried several different brands of noise reduction headphones staying away from Bose because they are "overpriced"  I finally broke down and tried a pair and instantly realized they were worth the price because they were far ahead of the others.  The same thing with Apple. People who have never used them think they are over priced when actually they are clueless as to what a quality product is.
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Anyway...the article was about the iPhone and its price.....the Galaxy 3s is way overpriced based on the money they have put into it. Â
@cyclops @Dredd57 Hardly. It'd be interesting to see how much profit a leading android smartphone has and compare it to how much profit an iphone has. As far as the 'value' of an item, that's determined by us consumers. The value of an item is roughly based on how much the market is willing to pay for such an item. Longevity and build quality help to drive the demand. Smartphones, and cell phones for that matter, are tossed in to get the 'latest and greatest' far more frequently than those going out to replace something that has ended up being lost or broken. So, provided the phone, and battery for that matter, can last 6 to 18 months, the manufacturers and the cell companies know you'll be back for the next juicy, mouthwatering, sexy piece of tech that shows up.
 @what? Since Samsung didn't spend millions on developing an OS, don't spend all that much on design, and use cheaper materials and price their flagship model comparatively with an iPhone....it is safe to say that the Galaxy "whatever model they are on now" is way overpriced and they have a much higher profit margin.  The funny thing is people complain about Apple's stuff being overpriced when it is people who buy The Galaxy that are being ripped off and they gladly bend over and take it from Samsung. Â
Is THAT why the Apple stock dropped? Rather ironic, it's the ipad mini that finally made me take to plunge to buy an ipad (first tablet). I could never like the ipad because it always feel too heavy and cumbersome in my hand. The ipad mini is so much lighter and it feels good in my hands. I too lamented the high price and the lack of retina display, but overall I love it. The screen is beautiful enough and I have never once wish for a bigger screen.
 @1000 What alternative tablets did you look at before deciding on the iPad mini?  Also, what cellphone do you use?