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Apple mulling $200 off-contract iPhone to tackle Android

updated 05:15 pm EST, Thu February 10, 2011

Apple may have cheap iPhone, soft SIM, dual mode

Apple has been developing a budget version of the iPhone that would help undercut Android, a leak Thursday afternoon maintained. The new version would be a third smaller and much less expensive, possibly as little as $200 off-contract. The design described to Bloomberg would use components from current iPhones to drop the price down.

The project has been in development since at least 2010 and isn't necessarily guaranteed to launch. Apple is known to be willing to cancel projects, even just before launch, if it doesn't believe they will succeed. If it reaches production, it would ship "near mid-year."

Despite talk to the contrary, Apple is also rumored to still be on track for developing a software-based SIM, known supposedly as a Universal SIM. Customers on GSM networks, such as AT&T or Bell, would have the option of switching carriers without having to swap SIM cards. A future iOS update would even let customers choose the carrier themselves.

The publication further supported notions of a dual-mode iPhone that could connect to either CDMA or GSM. A shift of the sort was entirely expected and was supported by the discovery of a Gobi chip in the Verizon iPhone that could have supported GSM if Apple had room for a SIM slot.

A low-priced phone might be difficult for Apple. The Verizon iPhone 4 does cost less, but its raw $171.35 parts price leaves very little room for Apple to drop the price without sacrificing major features. The 16GB of storage could be reduced to trim the price, but scaling back the display would affect what Apple could assume in resolution and interface for future iPhones. It may also be hesitant to drop the front camera or to fragment its OS with yet another resolution.

The cut could nonetheless get support from recent price drops. Just before the Verizon iPhone was made public, Apple dropped the iPhone 3GS to $49, albeit on contract. It might be counting on component price drops or to cut profit margins to get an iPhone 4 down to that kind of price on contract.

Although most of Apple's attention has been on competing against high-end Android phones like the Samsung Galaxy S line, it may see a $200 contract-free iPhone as a way of cutting into Android's rapidly growing share in southeast Asia and the developing world. Predominantly Chinese firms like Huawei and ZTE have been cutting into rivals' market share, especially Nokia, and in some cases have been putting pressure on even basic feature phones.

Even in the US, modest but reasonably high quality Android phones such as the LG Optimus V now cost $150 without a contract.

by MacNN Staff



  1. chas_m



    My wife

    would love it if this happened. She wants an iPhone, but says its "too big" for her (she's used to those tiny candybar feature phones; this would be her first smartphone).

  1. jpellino

    Joined: Dec 1969



    For two reasons - better hardware and hopefully break the nonsense of contract subsidy and bring the US market into oh - I dunno - the 20th century worldwide market?

  1. chippie

    Joined: Dec 1969


    Will Happen

    or iphone slides too far behind Android phones this year.

  1. SockRolid

    Joined: Dec 1969


    This will kill Nokia. Oracle will kill Android.

    Nokia is still the world's largest manufacturer of mobile handsets. Because they own the low-end "feature phone" market. But a cheaper, smaller, simpler iPhone would cut into that market drastically.

    A cheaper, smaller, simpler iPhone would also kill of a big chunk of Android sales. But as we all know, the Oracle lawsuit will kill Android anyway. So who cares? Android could be forced off the market entirely, as per the language in the suit ("impounded and destroyed" being the key phrase there. Or more likely Google will be forced to pay a royalty for every copy of Android sold. This is what they hoped to avoid by ripping off Java in the first place.

    So Android will no longer be free. It will lose its only advantage. Droid done.

  1. Pilsner6910

    Joined: Dec 1969



    Ive often wondered where the other $500 or so comes from for the rest of the customers full price of an iPhone?
    it surely cant be for the cost of the pretty box it comes in, can it?

  1. Lifeisabeach

    Joined: Dec 1969


    $200 off contract? To what advantage?

    The rate plans on AT&T and Verizon are identical for on or off contract. So unless this is different in the rest of the world (I'm sure it is. . . our carriers suck in every way imaginable), then to what advantage would it be to buy a cheap iPhone off contract for the same price as the regular one on-contract? My bill will not change. I know T-Mobile has off-contract pricing, but they are the exception here, and don't carry the iPhone anyway (yet).

  1. wrenchy

    Joined: Dec 1969


    Oh look!

    Even the poor riff raff can afford an iPhone now.
    Would Apple even fathom this if it had no competition? In your dreams.

    The next thing you'll be hearing is Apple "Outing" some.... GASP!.... 7-Inch iPads or something.
    Sandpaper not included.

  1. wrenchy

    Joined: Dec 1969



    get me started on the whole "Frag-mhun-tay-shun" thing.

    Maybe the one-size-fits-all approach is not the best after all!

    Who would have thought?

  1. SunSeeker

    Joined: Dec 1969


    Finally... iPhone for the kids
    (I currently limit kids phones to $129 prepaid, but will happily double this for an iPhone Mini)

    No way their getting a $700 phone on OR off contract

  1. SunSeeker

    Joined: Dec 1969


    I actually

    I actually weighed up getting a $200 android phone for my daughter recently - decided against it because I didn't want her to have access to any security/safety risks and don't want to be tech support either

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