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| August 5, 2011
Is Apple Considering A Low-End, Contract-Free iPhone?
Apple has been doing incredibly well distributing the iPhone all over the world through carrier contracts. Recent revelations seem to point out a new avenue. According to RBC Capital Markets analyst Mike Abramsky (via: AppleInsider), Apple might consider a low-end model of its iPhone if it provides an “innovative, category killer experience." In other words, if it rips up the competition. Abramsky met with Apple COO Tim Cook and CFO Peter Oppenheimer on Wednesday, August 3, and although he could not quote the leaders directly, he picked up key points from the meeting. Apple only does things when they believe the endeavor might be successful. Although launching a low-end model of the iPhone 4 alongside the iPhone 5 might add some extra money to their wallets (especially if they hit the Chinese market hard), should it really be a focal point? This is debatable depending on how Apple defines "low-end model." If they just mean adding two features to the current iPhone and selling it for $50 less, I don't see the need (although that would be nice). However, if their plan is to make a contract free iPhone, such a focus would go a long way. After all, the pre-paid market makes up two-thirds of the world's 1.5 billion mobile users. AppleInsider also reported:
Though those familiar with Apple's design philosophy and strategy may dismiss the statement as seemingly obvious, it does run against the grain of recent assertions that Apple would release a contract-free iPhone for primarily financial reasons. For instance, Deutsche Bank analyst Chris Whitmore set off a round of speculation in June when he speculated that "it's time for a mid-range iPhone," largely based on the assumption that Apple is looking to reach the pre-paid market.After a meeting with two of Apple's top executives, RBC Capital Markets analyst Mike Abramsky concluded that the company's primary requirement for launching a lower-end iPhone is whether the handset would crush the competition by providing a "category-killer experience." Of course, this mystery device would be an iPhone nonetheless and therefore, it should be a "category-killer" by default. All in all, if Apple goes ahead with this plan, they would have an advantage to the Android market with their "integrated approach to hardware and software, oversight of user experience and application ecosystem curation."
The executives affirmed Apple's "untapped global opportunity," especially in China, which has seen tremendous growth in recent years, the analyst said. Other emerging markets such as Latin America, the Middle East and India also provide Apple with a significant opportunity for expansion.If such a device is really in the making, and it might be, as the conditions Apple poses (category-killer-experience), seem to be fulfilled, I'd like to see what the whole "package" contains. Of course, it would still be an iPhone so no worries on this end. Is this the right move? Or would it cheapen the iPhone brand? Tell us in the comments!