Friday, January 11, 2013

Lower-end iPhone?

According to some people briefed on this matter, Apple is working on a lower-end iPhone. This is a big shift in corporate strategy as its supremacy in smartphones has slipped. While Apple has explored such a device for years, the plan is progressing and a less expensive version of its flagship device could launch later this year, said one of the sources.

The cheaper iPhone would likely resemble the standard iPhone but with a different, less-expensive body. One possibility under consideration is lowering the cost of the device by using a different shell made of polycarbonate plastic; in contrast, the iPhone 5 currently has an aluminum housing. Many other parts could remain the same or may be recycled from older iPhone models. A spokeswoman for the Cupertino, California, company declined to comment. Apple now faces greater pressure to make the iPhone more affordable. An onslaught of lower cost rivals powered by Google Inc.'s Android operating system are rapidly gaining market shares.

As of the third quarter of 2012, Apple held only 14.6% of worldwide smartphone shipments, down from a peak of 23% in the fourth quarter of 2011 and the first quarter of 2012, according to IDC. Meanwhile, Samsung Electronics Co.'s share, rose from 8.8% to 31.3% from the third quarter of 2010 to the third quarter of 2012. The Korean electronics maker on Tuesday said it capped its best year ever with another record quarterly profit, adding that it expects operating profit of $8.1 billion to $8.5 billion for the three months that ended in December.

Apple has been considering a less-expensive iPhone since at least 2009, viewing it as a way to grab market share and introduce people to the brand, said people familiar with the efforts. Before the launch of the iPhone 4 in mid-2010, the company developed designs for cheaper phones that were very similar to the iPhone at the time but had a less expensive back and sides, one of the people said. A less-expensive iPhone risks crimping the company's profit margins, which executives have been loath to sacrifice.


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