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Of all the rumors circulating in anticipation of the release of the next iPhone, none seems to bear as much promise as the supposed low-end iPhone that Apple may release to compete with its cheaper alternatives. That'd be a big move, but one that seems out of character considering Apple's past releases. Yet, as AllThingsD reports, J.P. Morgan analysts Gokul Hariharan and Mark Moskowitz have put forward what seems like a more enticing theory--that the next iPhone may not be a low-end model at all, but rather a "mid-end" phone aimed at capturing the best of both ends of the market.
Hariharan and Moskowitz believe the releases of past Apple products support this possibility, specifically the iPad Mini and the iPod Nano. Apple designed both devices for mid-range markets despite initial concerns that the devices might still be too expensive (especially the iPad mini), only to find that the market embraced them. When launched, the iPod Nano was priced at merely $100 below the standard iPod price, while the iPad Mini's $329 retail price placed it significantly above competitors like the Kindle Fire.
This strategy seems like it could work for the iPhone as well. As indicated by Hariharan and Moskowitz's graph above, the smartphone market is currently dominated by low and high-end smartphones, with a largely untouched middle ground that's dominated by Samsung. (See the graph above.) They believe that an Apple phone priced in the $350-$400 range could easily take up as much as 25% of the middle market.
It's a good idea in theory, but with one hitch--the iPhone 4 already occupies this market. Unless the new iPhone introduces a massive shift in the specs and features of the iPhone 4, there may be little reason to no reason to introduce a new phone into this marketplace. The pricing also might work well in the U.S.; what's less certain is how a move will appeal to the overseas markets currently dominated by Android. Another potential problem is that the iPod Nano and the iPad Mini appeared in emerging markets, while smartphones are now a part of our daily lives.
Still, as MacRumors reported from Digitimes this morning, Apple might release a low-end iPhone after all. According to Digitime's source, "Speculation currently circulating in the iPhone supply chain in Taiwan indicate that Apple plans to launch an inexpensive model targeting emerging markets with initial quarterly shipments of only 2.5-3.0 million units to test market response."