Apple’s Rumored Low-Cost iPhone Will Not Be Inexpensive, Says Pegatron CEO

 @KukilBora on June 20 2013 7:58 AM
iPhone
The rumored low-cost iPhone model will not be a budget phone, it will rather be offered at a higher price, said Pegatron CEO. Reuters

The rumored low-cost iPhone model will not really be a budget phone as it will be offered at a higher price than what most people expect, Pegatron (TPE:4938) CEO T.H. Tung said, at the company’s shareholders meeting on Thursday.

Tung said that Apple’s (NYSE: AAPL) less expensive iPhone should not be called “cheap” although it will still offer more value for money compared to other feature phones, AppleInsider reported, citing Japanese blog Macotakara.

Tung’s statements come on the heels of earlier reports, suggesting that Pegatron, a Taiwanese electronics company, will manufacture Apple’s low-cost iPhone and help reduce the iconic phone-maker's potential for over-dependence on Foxconn.

Media reports also said that Pegatron is hiring as many as 40,000 workers for the second half of 2013, which fueled further speculation that a less expensive iPhone model is in the pipeline.

This is not the first time that Apple’s so-called low-cost iPhone is predicted to be more expensive than generally expected. In May, AllThingsD reported on a note from analysts Gokul Hariharan and Mark Moskowitz of J.P. Morgan, saying that the low-priced iPhone model could set customers back by as much as $350.

According to the note, Samsung accounted for about 35 percent of the market share for smartphones priced between $200-$500, and Apple could gain up to 25 percent of this market segment in the next 12 months, if it prices the low-cost iPhone in the $350-$400 range.

Morgan Stanley analyst Katy Huberty also shared similar views earlier this month, saying that if Apple prices the low-cost iPhone at $399 without a carrier contract, the device would actually boost the company’s profit margins.

"We now see the most likely starting price for the low-end iPhone at $399, as supply chain components appear similar to the current iPhone lineup and the low-end iPhone would replace the iPhone 4/4S sold in the $450-$549 range before recent discounts," Huberty said.

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