Apple will finally make its products affordable for the middle class crowd by addressing the pre-paid mobile phone market, releasing contract-free iPhone for $350 along with iPhone 5 in September.
It's time for a mid-range iPhone, analyst Chris Whitmore with Deutsche Bank declared in a note to investors on Monday. He believes Apple will offer a lower-end iPhone priced between $300 and $500 paired with a pre-paid voice offering, AppleInsider reported.
Apple COO Tim Cook had announced earlier this month about the company’s plans to hit the emerging pre-paid market by extending its price range. Apple has already seen a rise of 12.3 percent to 29.5 percent in the first quarter and this strategic move of the company will further broaden Apple’s market compared to its other competitors.
Whitmore has noticed that of 1.5 billion mobile customers worldwide, two-thirds are pre-paid users.
Apple shipped (about 87 million) units over the past 2 years which suggests it has reached only 6% penetration of its current addressable subscribers, Whitmore said. Looking forward, we believe Apple has room to run both in terms of greater market penetration as well as incremental carrier additions going forward.
He believes that if Apple were to price this iPhone 4S at $349, it could have the product be incremental to its corporate gross margin without negatively impacting profitability.
Apple is also working on cheaper iPhones but reports from The Wall Street Journal and Bloomberg claimed that the company is planning to release a smaller model, about half the size of iPhone 4.