Before the iPhone 5c launched, a lot of rumors claimed that Apple would release an ultra-cheap iPhone for countries that do not have carrier subsidies. What Apple released was of course a phone that didn’t hit a low price point, so people continue to speculate if the iPhone would ever hit a sub-$500 price.
According to Needham & Company analyst Charlie Wolf, it would be “impossible” for Apple to build a cheap iPhone unless the company wants to damage its high-margin business.
From Apple Insider:
To hit the so-called “sweet spot” of smartphone pricing in emerging markets, Apple would have to price a hypothetical cheap iPhone at around $350 without a carrier contract subsidy. If Apple were to target a hypothetical 40 percent gross margin with such a product, Wolf’s estimates suggest the cheap iPhone would need a bill of materials at around $90 — or less than half the bill-of-materials cost of high-end iPhones.
A major argument when justifying Apple’s move to lower price points has been the saturation of the high-end smartphone market. But Wolf believes that there are plenty of Android users in the US’ saturated smartphone market who will switch to iPhone, much more than those who switch to Android from iPhone.
Do you agree with the analyst? Will Apple continue to cater to the high-end, and not reach the lower spectrum of the market? Let us know in the comments below.
No comments:
Post a Comment