Analysts from IHS said that the fact that the company does not offer a true entry-level smartphone will cause Apple to “miss out on the hottest growth opportunity in today's smartphone business.”
While the iPhone 4 is now priced at $99 and the iPhone 3GS is free with a 2-year contract, they are not considered entry-level devices as they are still fully subsidized. And, realistically, we would have to admit that $0, $100 or even $200 for a smartphone are largely irrelevant considering the monthly cost to subscribe to a voice and data plan. IHS said that Apple would need an iPhone that would cost $100 to $150 without subsidies.
"Long-term phone contracts are available with service deals in the United States and other regions where mobile network operators offer subsidies,” said Francis Sideco, senior principal analyst, wireless communications, for IHS. “These types of business models are not as popular in emerging regions where demand is rising the fastest for low-end smartphones. To compete in the low-end smartphone market, a company must offer a product that can be sold cheaply without a subsidy. The iPhone 3GS and iPhone 4 are still expensive if you don't buy them with a contract."
Still, IHS expects global iPhone shipments to total 83.6 million units in 2011 and 169.0 million in 2015. However, shipments of low-end smart phones are expected to rise to 422 million units in 2015, the firm estimates. However, it may be worth noting that Apple never had interest in a low-end, low-margin business. There is no conceivable reason to change that strategy now.
But then again, when you buy an iPhone, would you opt for the lower end model, or the higher end?
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