Over the last few years, there have been rumors of a cheaper, lower-end iPhone to complement the standard model, in order to appeal to lower-budget consumers. These rumors have intensified over the last few months, leading the analysts at the firm Detwiler Fenton to predict that Apple may ditch the A6 processor, used in the iPhone 5, for a third-party chip such as the Qualcomm Snapdragon, used on other lower-end phones.
According to the analyst, the need to maintain profit margins would lead Apple to venture into third-party chips, namely the Snapdragon:
“AAPL would not want a value priced iPhone to offer the same kind of graphics and video support, processing power etc. that its premium priced device would, therefore a less powerful lower-end Snapdragon integrated solution would help segment the product.”
Analysts are specialized in giving investors insight on the product pipeline of secretive companies such as Apple. They base their analysis on recent rumors and speculation from different sources, in order to make a judgment on what the company is most likely to be working on. Most of the time, however, analysts do not have access to exclusive sources inside companies, instead commenting on publicly available information. However, as unreliable as the rumor mill often is, commentary from analysts may not be that insightful.
Currently, Apple serves the lower-end segment of the phone market by simply selling its lower-generation devices at a heavily discounted price: currently, the iPhone 4S and the iPhone 4. These naturally have lower specifications, therefore the new low-end product, should it ever happen, will likely just be a recycled version of a previous-generation model, perhaps with a revised design and weaker materials.
While Apple has repeated brushed off any speculation of such a lower-end iPhone, rumors likely won’t go away until the a similar product is finally shipped, if it ever happens. It would certainly be a move away from Apple’s way to do business, which has always focused on performance, quality and profit margins instead of market share. Despite fears from investors, the iPhone, at its current price, is still the best-selling smartphone in the United States.