9 January 2013 - 4:18pm | posted by | 0 comments

Could cheapoPhone at $99 turn the Samsung tide for Apple?

iPhone5: Top of the lineiPhone5: Top of the line

An iPhone costing as little as $99 could be Apple's answer to the inroads that Samsung has been making into the smartphone market.

Both the Wall Street Journal and Bloomberg carry reports along these lines this morning, "according to people briefed on the matter." Unsurprisingly, Apple had no comment.

The WSJ said this would be "a big shift in corporate strategy as Apple's supremacy in smartphones has slipped."

The cheaper phone could look like standard iPhone but with a less-expensive body - polycarbonate plastic instead of aluminum was one suggestion. Other parts could remain the same or be recycled from older iPhone models. The cheapoPhone could launch later this year.

In the 2012 third quarter, Apple had just 14.6 per cent of worldwide smartphone shipments, against 23 per cent in the first quarter of 2012..

Samsung meanwhile, rose from 8.8 per cent to 31.3 per cent from the third quarter of 2010 to the third quarter of 2012.

Under Steve Jobs, Apple prided itself on offering a relatively small number of products mostly targeted at the high end. Profits over scale, was the mantra.

That certainly looks as if it is changing. Apple is thought to have been considering a less-expensive iPhone since at least 2009.The cheapoPhone would, the argument goes, grab market share and introduce people to the brand.

Today the iPhone is Apple's chief moneymaker, said the WSJ, bringing in 48 per cent of revenue in the quarter ended in September. It remains the top-selling smartphone in the U.S. but Apple's share of the high-end market has been socked in China, for example.

The iPhone 5 without a wireless contract starts at $649 in the U.S. on Apple.com, and can cost even more overseas. It starts at £529 in the UK. In the U.S., the iPhone 5 starts at $199 with a two-year wireless contract. Older models are available for $99 or free with a two-year contract.

Apple's stock has fallen 25 per cent since it reached an all-time closing high of $702.10 in September as investors worry that competitors might be gaining ground.

Gene Munster, an analyst with Piper Jaffray, told the WSJ a less expensive iPhone wouldn't necessarily hurt Apple's overall profit margin - if it attracts buyers who haven't bought iPhones before.

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