Report: Apple may build less expensive iPhone

Published on NewsOK Modified: January 9, 2013 at 5:49 pm •  Published: January 9, 2013
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Google says more than 500 million Android devices have been activated since the software's release four years ago. By comparison, Apple had sold about 271 million iPhones through last September.

Apple could fall further behind as it focuses more on markets outside the U.S. and Europe. That's because many households in some of the most promising markets, including China, can't afford iPhones at their current prices. Apple CEO Tim Cook, who took over the helm shortly before Jobs died in October 2011, is currently visiting China.

"The Western markets are saturated and Apple has to look at emerging growth markets and develop a product that meets the demands of the region and affordability," said N. Venkat Venkatraman, chairman of the Information Systems Department at Boston University's school of management.

Under Cook's leadership, Apple already has deviated from Jobs' philosophy by selling less-expensive versions of its products. Late last year, Apple introduced a smaller model of its iPad. The iPad Mini sells for $329, or about a third less than what the latest full-size iPad starts at. Even so, Apple is still charging $80 to $130 more for the iPad Mini than similar-sized tablets, including Google's Nexus 7.

Analysts are divided on whether a cheaper iPhone would be good for Apple. Some believe Apple needs to expand the choices to preserve market share and sustain revenue growth. Others fear a less-expensive iPhone would siphon sales from the premium model and diminish the company's profit margins. That same concern raised by the recent introduction of the iPad Mini is one of the reasons that Apple's stock price has fallen 26 percent from a peak reached in late September, just as the latest iPhone went on sale.

Apple's stock fell $8.21 Wednesday to close at $517.10.

The iPhone and related products generated $80 billion in sales during Apple's last fiscal year, which ended in September. It accounted for more than half of the Cupertino, Calif., company's total revenue.