WSJ: ‘Apple Working on a Less-Expensive iPhone’

Jessica E. Lessin, reporting for the WSJ:

The cheaper phone could resemble the standard iPhone, with a different, less-expensive body, one of the people said.

One possibility under consideration is lowering the cost of the device by using a different shell made of polycarbonate plastic; in contrast, the iPhone 5 currently has an aluminum housing.

Many other parts could remain the same or be recycled from older iPhone models.

Apple’s strategy for lower-priced phones for the last four years has been to sell one- and two-year-old models at a discount. But perhaps the glass-backed iPhone 4 and 4S (and, come next year, the aluminum-backed iPhone 5) are inherently too expensive to produce to hit certain lower price points. Maybe Apple just wants to get rid of the last remaining products using those old grody 30-pin adapter ports. But whatever the reason, this would be a significant strategic shift.

Update: I think this is a misleading way to describe Apple’s market position:

Apple now faces greater pressure to make the iPhone more affordable. An onslaught of lower cost rivals powered by Google Inc.’s Android operating system are gaining market share.

In the 2012 third quarter, Apple held only 14.6% of worldwide smartphone shipments, down from a peak of 23% in the fourth quarter of 2011 and the first quarter of 2012, according to IDC.

This makes it sound like Apple’s iPhone sales peaked in 2011, but that’s not true. They continue to grow. What happened is that “smartphones” were but a sliver over the overall phone market when Apple got started in 2007, and now have reached over 50 percent of the total phone market. So Apple’s share of “smartphones” dropped from 2011 to 2012, because even though iPhone sales continued to grow, they didn’t grow as fast as the entire handset industry’s shift to smartphones (which shift, was, yes, almost entirely about Android).

Apple’s share of worldwide phone shipments has done nothing but go up since 2007. I doubt many WSJ readers are aware of that after reading this article. (Although it may well be true that Apple needs to introduce new lower-cost phones for this to remain true.)

★ Tuesday, 8 January 2013