Rumour: Apple to target Asia with Sept budget iPhone launch

The much-speculated launch of the new generation Apple iPhone may include a ‘budget’ (iPhone 4S) version of its current flagship device alongside a new fifth generation (iPhone 5) smartphone in September, according to a note from Deutsche Bank.

The bank’s analyst, Chris Whitmore, believes that the speculated dual model launch is specifically targeted at growing Apple’s presence in Asia’s fast-growing and lucrative smartphone market, which is expected to ship more than 100 million smartphone devices, according to research from Canalys.

More details from Whitmore’s comment can be found on CNN Money’s Apple 2.0 blog:

“With Nokia and RIMM struggling,” he [Whitmore] writes, “the time is right for Apple to aggressively penetrate the mid range smart-phone market (i.e. $300-500 category) to dramatically expand its [total addressable market] and market share.”

As Whitmore sees it, an iPhone 4S that is unlocked, priced around $349, and comes with a pre-paid voice plan would “drive significantly greater penetration” into an addressable market that has grown to include 1.5 billion potential customers in 98 countries, two thirds of whom prefer pre-paid plans.

The iPhone 4 has been a huge success in several Asian markets – including China which recently became Apple’s second largest app market – so one could expect the fifth generation device to make a similarly strong impression on Asia’s gadget and tech-hungry smartphone audience.


What is particularly interesting is the potential for a mid-range smartphone.

At US$350 (circa 10,000 THB), the iPhone 4S would prove to be an ideal device for those who are unable to afford the flagship product, which is currently more than double the price.

As the chart below from CNN illustrates, Apple is targeting more price-conscious pre-pay mobile users, which constitute a huge percentage of users in developing markets like Asia:

I’ve often commented that the iPhone price costs it out of much of Asia, leaving Apple focused on a more affluent audience. However, many would consider a cheaper iPhone option alongside the burgeoning mid-range smartphone options which include Nokia, Android, RIM and more.

Of course, such rumours of a budget device are nothing new. Rumours of a $200 device surfaced in February this year after a leak was published in Bloomberg.

The potential of multi-tiered pricing on iPhones is already evident in India, as Pluggd.In notes, where the price of the iPhone 3GS has been slashed by 40% putting it in line with competition and creating a more difficult market for smartphones.

Apple is, of course, not alone in targeting Asia for growth. Both Nokia and RIM have made much noise of the significance of Asia in recent weeks while Android is the region’s top-selling operating system.

Nokia is targetting an Asian ‘comeback’ under new chief executive, Stephen Elop.

RIM’s regional marketing director told Gregory Wade that he is particularly upbeat on the struggling firm’s success in Asia despite turmoil in other markets. Speaking to the AFP recently, Wade said: “We are in a great spot. When I think about the (Asian) markets, I have a big smile on my face.”

As the Economic Times (of India) notes, Asia accounted for 11 percent of RIM’s global shipments in the first quarter of 2011, compared to eight percent for all of 2010.

A mid-range iPhone strategy would offer stiff competition for both Nokia and RIM, feeding on Asia’s huge appetite for Apple products as demonstrated by two recent cases in which one Chinese teen offered her virginity for an iPhone while another sold his kidney to buy an iPad 2.

Every day is ripe for Apple rumours and, after much speculation and tips, ultimately time will tell exactly what device is launched and whether it arrives this year. But certainly, Apple is looking into the potential of mid-tier smartphones at some point.