Apple’s “Cheap” iPhone Isn’t Really All That Cheap, Says J.P. Morgan

What if the device is actually targeted at the mid-level segment, analysts ask

  IDC chart
A couple of analysts with a keen eye for Apple’s M.O. are proposing an interesting theory that seems to confirm the “budget” iPhone rumor and, at the same time, deny it. Everybody confused?

A couple of analysts with a keen eye for Apple’s M.O. are proposing an interesting theory that seems to confirm the “budget” iPhone rumor and, at the same time, deny it. Everybody confused?

Gokul Hariharan and Mark Moskowitz over at J.P. Morgan have released the results of their research looking at the possibility of Apple launching a cheaper iPhone this year.

The duo, armed with the chart displayed above, say Apple has one such device in the works, but it’s not low-end. And it’s not high-end either, because they’ve already got that covered.

No. It’s “mid-end” (if there is such a thing) and it seems to fit perfectly with the company’s modus operandi for the past decade.

Years ago, Apple made a mid-end iPod that proved to be one of the most profitable moves for its iTunes business. Then, more recently, it introduced the iPad mini.

While the iPad mini has considerably lower profit margins compared to Apple’s corporate average, the company “believes deeply in the long-term potential of the tablet market.”

These were the exact words of Apple’s CFO Peter Oppenheimer, and there's no reason not to extrapolate that the iPhone is the remaining business segment to undergo this change, J.P. Morgan believes.

In related news, DigiTimes has heard from supply chain sources that Apple is planning to introduce a “test” batch of these budget iPhones this year, a rumor we find unlikely, if not disturbing.

But while the rumor sounds sketchy, the same report includes some specifications worthy of our readers’ attention.

The sources in Taiwan said this cheap iPhone will employ a 4-inch display (most likely Retina-grade), a plastic chassis (to drive the manufacturing costs down), and an A6 processor (the SoC currently used in the iPhone 5).

Apple’s WWDC in June is unlikely to yield a new iPhone announcement, as Tim Cook (Apple’s CEO) himself told investors to look out for exciting announcements in fall.

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