Morgan Stanley: Apple iPhone mini could triple Apple's share in China
The world's largest carrier, China Mobile, has never carried the Apple iPhone because of the mobile operator's proprietary 3G network. But Huberty sees Apple able to work out a deal to sell the Apple iPhone mini for China Mobile's TD-SCDMA network and that would add another 20% of the Chinese smartphone market to the 10% that the Apple iPhone 5 already owns.
$330 would allow Apple to be competitive with Chinese upstarts like ZTE, Huawei, Lenovo and Coolpad. Even assuming low 40% gross margins and a 1/3 iPhone cannibalization rate, an Apple iPhone mini makes money for Apple. For example, if the iPad mini were to launch in China this year, Apple's gross profit margin would drop 2 percentage points to 49%, but the additional volume would raise gross profits by an additional $2.4 billion.
What would be required to get this going would be the launch of a lower priced Apple iPhone mini, passing legislation to allow mobile numbers to be ported over between carriers in China, and a deal between China Mobile and Apple that allows the iPhone to be used on the operator's proprietary network. Both Apple and China Mobile have tried since 2009 to work out a deal, with the last such meeting taking place last month when Tim Cook visited the CEO of the carrier.
Long time Apple executives are not used to cutting prices and making up the difference on volume. But a low priced iPhone could take Apple in a new direction and not just in China. If Apple sees that it is able to make up for the lower profit margin by selling more product, it could be one of those light bulb turned on moments that could give Apple a second wind and make it a dangerous competitor once again.
2. menny07 (Posts: 89; Member since: 13 Dec 2012)
hmm. The iPhone 5 has already gained prominence as a high-end smartphone. Why would people want a cheap(materials) and low-end version? Price, yes, but status is crucial in parts of the world like China. It will probably be looked down.
3. tiara6918 (Posts: 1916; Member since: 26 Apr 2012)
For $330 I could get a lenovo smartphone with a hd 5"screen,quad core processor. So why should I settle for an iPhone mini that would probably have a 3.5-4" display with bad specs? Unless, I'm an ifan or I'm more comfortable on using smaller devices
4. nard0207 (Posts: 18; Member since: 03 Jan 2013)
The iPhone is already a mini compared to other flagship devices. Maybe it should be called iPhone nano instead.
6. kozza3 (Posts: 620; Member since: 17 Oct 2012)
dang... these media outlets are really trying to sell apple stock
7. Sir.Jony.idiote (Posts: 3; Member since: 19 Feb 2013)
It seems to me that Morgan Stanley got LOOTTTTTTTSSSSSS of Apple share @$700.
The real hidden message behind morgan stanley "apple mini blablabla were"
--> APPLE, PLEASE.... please.... sell cheap iphone in China. We (morgan stanley) need the share above US$ 700 again. Otherwise, we're screwed".
It's not apple user, it's not apple who want cheap iphone.
it was someone who were trapped by lower apple share price.
8. Sir.Jony.idiote (Posts: 3; Member since: 19 Feb 2013)
The problem for iphone in China and South East Asia is NOT about the price. But it's about Credit card.
Apple iTunes require Credit Card..... Android Play Store not require Credit Card.
9. Dro (Posts: 27; Member since: 23 Dec 2009)
Who would want the mini version of a mini phone in today's world of monster 1080p screens?
10. jsdechavez (Posts: 708; Member since: 20 Jul 2012)
The iPhone mini if it ever comes out will probably cost as much as aging Android flagships.. But with mid-range hardware from 2 years ago.