Following the release of Apple, Inc.’s (NASDAQ:AAPL) sixth-generation iPhone 5, the third-generation iPhone 3GS was effectively phased out, with the iPhone 4 becoming the free-on-contract model.
According to an analyst from Needham & Company, Apple may not be introducing a more affordable version of the signature smartphone to appeal to consumers with a lower budget.
Charles Wolf’s latest note to investors says that emerging markets could benefit from a lower-priced iPhone. However, that may not be possible at the moment, as the iPhone 4 is currently the option being pushed to prepaid customers or customers looking to get a free phone on a two-year contract, in lieu of the iPhone 3GS
Developing or emerging markets are usually dominated by prepaid customers, and unsubsidized phones in these countries usually cost around $150. Wolf offered an interesting perspective on whether Apple should release a cheaper iPhone for these markets, describing the dilemma as an “open question.” He added, however, that as China is now the largest smartphone market in the world, it would make sense for Apple to target prepaid markets in the future.
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Most smartphone buyers in China are predisposed to buying unlocked, or non-contract handsets.
To back up this postulate, Wolf suggested that the current unsubsidized price of an iPhone 4 ($450 in most areas) is too high for Apple to gain a significant market share in emerging markets. But as the iPhone 5 will be offered by China Mobile Ltd. (NYSE:CHL), which has 688 million subscribers, Apple could make do for now in terms of market share as the carrier is presently the largest in the world.
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