Apple eyes cheaper iPhones for the masses

Posted by Trent Nouveau

A Piper Jaffray analyst believes a cheaper "iPhone for the masses" will likely be introduced by Apple at some point in the near future.

"The delta between smartphone market growth and iPhone growth will push Apple to release a lower priced device despite comments to the contrary," Munster wrote in an industry note obtained by AppleInsider.

"Looking back historically, Apple always priced Macs as the higher end of the market and ultimately the iPad, and now the iPad mini, became the 'Mac for the masses.'"

According to Munster, Apple "needs" to develop an entry-level iPhone capable of competing with the plethora of low-cost Android devices currently saturating the mobile market. Such a device, says the analyst, would likely be manufactured without a Retina display and constructed using more "moderate" components for a $200 price point, contract free.

It should be noted that Ben A. Reitzes of Barclays Capital expressed similar sentiments earlier this month, when he predicted Apple will expand its current iPhone lineup with an entry-level model.

As AppleInsider's Neil Hughes notes, Cupertino is already selling its two previous-generation handsets alongside the latest flagship model to reach additional customers. Currently, an 8-gigabyte iPhone 4 is available for free with a new two-year service contract, while Apple is offering unlocked and contract-free iPhone 4 for $450.

In related iPhone news, UBS analyst Steve Milunovich recently slashed his estimates for Apple’s fiscal 2013 and fiscal 2014 years, all while dropping his price target on Apple shares to $700 from an earlier target of $780.

According to Milunovich, Apple's wildly popular iPhone lineup may have peaked as it faces an unprecedented onslaught from a new-generation of slick Android-powered handsets.

"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," Millunovich confirmed in an industry note.

Although Milunovich sees iPhone production tapering off to 25 million units in the first calendar quarter next year, he did emphasize that Cupertino could get an early pick-up in 2013 with a new iPhone 5S expected to launch next summer.