When Apple first released the iPod, the number of models available were scant. Indeed, it was only after the iPod built up an immense user base that Apple began going after the lower end of the market with devices like the iPod Mini and the iPod Shuffle.
In a similar vein, Apple iPhone offerings have been pretty standard. Every year there’s a new model for $199 while the previous iteration becomes available at a discounted price. More recently, Apple has been trying to prevent a price umbrella from emerging over its products by offering the iPhone 3G to consumers via AT&T for only $49.
Now, AppleInsider relays a note from Deutsche Bank analyst Chris Whitmore that Apple is going after the prepaid mobile phone market and will offer a mid-range iPhone model this fall for somewhere between $300 and $500.
Whitmore noted that of the addressable market of 1.5 billion mobile customers worldwide, two-thirds of those are pre-paid users. He sees a so-called “iPhone 4S,” released alongside an anticipated fifth-generation iPhone, as a new category of device that would help Apple address that market.
If Apple were to price this “iPhone 4S” at $349, Whitmore estimates that Apple could have the product be incremental to its corporate gross margin without negatively impacting profitability.
Interestingly, the very name of the next iPhone model has been unclear, with some claiming it will be dubbed the iPhone 4S and others calling it the iPhone 5. As a result, some have even wondered if Apple will be releasing two iPhone models this fall – an advanced bells and whistles laden iPhone 5 alongside a lower end of the spectrum iPhone 4S.
Such a scenario might explain the confusion surrounding Apple’s next-gen iPhone, a theory Whitmore sees validity in. Whitemore writes that the iPhone 4S may be similar to a low end iPod Touch and that a 8GB prepaid iPhone device could still net Apple some healthy margins, albeit not nearly as high as what they enjoy with the current iPhone.
Also note that prepaid mobile subscribers constitute the majority of mobile users in China, a market Apple is seriously intent on cracking into in a major way. Early last week Apple COO Tim Cook was spotted at China Mobile headquarters. With over 600 million subscribers, China Mobile is the largest carrier in the world and clearly an attractive partner for Apple. Also, earlier today we reported that the latest iOS 5 beta recently became a lot more China friendly with the addition of popular Chinese email accounts to the iOS accounts pane.