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Apple hints iPhone 5 'product transition,' cheap model too

updated 06:50 pm EDT, Tue July 19, 2011

Apple results call hints iPhone 5 and cheaper

Apple during its spring 2011 results call made strong allusions to new iPhone launches in the summer. The company warned its profit margin would drop from 41.7 percent to 38 percent due to a "product transition" having an impact in the quarter. A chance exists that it may be a new MacBook Air, but the large volume of iPhones could make at least one new model more likely.

The mention of the September quarter could support more recent beliefs that the next-generation iPhone would ship in or before September. Apple's margins depend on devices being shipped and sold to carriers and customers.

Most expect that the next iPhone will use a dual-core A5 processor, an eight-megapixel camera, and possibly 64GB of storage on the high end. These and a possibly larger screen are likely to affect Apple's profit margins as it has to raise the price of manufacturing an iPhone without changing the price.

Cheaper iPhones were given less direct allusions but were discussed repeatedly in the call. CFO Peter Oppenheimer noted that emerging and developing countries like Brazil, China, and Mexico were "key drivers" for Apple's record 20.34 million iPhones. Most of these areas were on the whole prepaid. When asked about competing with low-cost Android phones and possibly ceding market share, the executive pointed to the existence of the $49 iPhone 3GS but also repeated a statement the company has sometimes used in advance of lower cost products like the iPod shuffle.

"We'll only make the product we're very proud of, that are the best in the world," the executive said. "If we can do it with a lower price, we will."

Oppenheimer added that, while China, Hong Kong, and Taiwan had grown six hundred percent and had made $8.8 billion for Apple in the fiscal year so far, the company wanted to improve its experience. Apple hadn't learned "how to play perfectly" in China but was improving and would take what it learned to other areas.

Rumors have hinted Apple might keep the iPhone 3GS as a very cheap option for those countries. Apple has more often sold its most recent device as the old model after its sequel arrives and could simply drop the price more aggressively than it has in prior years, when the price gap wasn't as large.

by MacNN Staff



  1. Arne_Saknussemm

    Joined: Dec 1969


    So Apple will make "Poor peoples phones" as well?

    Is the "High end" no longer enough for Apple?
    What do you think Jeff?

  1. DaJoNel

    Joined: Dec 1969


    Ehh, nope.

    I'm sure Apple would find a way to make their "cheap" model desirable, but I definitely would not buy it. Also, I see this as a potential problem; detracting from the traditional iPhone will not help Apple. Many will just buy what's cheaper and then iOS will have to be fragmented to support lesser processors, graphics, etc. Not a good move and I don't see it happening.

  1. iphonerulez

    Joined: Dec 1969


    I doubt that Apple will sell

    cheap iPhones even in Asia. They'll basically be last year's models at a lesser price. That will practically be a freebie sale for Apple since an older model will have paid for itself in R&D costs a long time ago. There is no way that Apple will be fragmenting the iOS lineup. There is absolutely no reason at all that Chinese consumers would turn their nose up at an older model iPhone if the price is right.

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