Milunovich: Low-cost Apple iPhone M to outsell full-priced Apple iPhone 5S

Milunovich: Low-cost Apple iPhone M to outsell full-priced Apple iPhone 5S
UBS analyst Steve Milunovich told his clients that the low-cost Apple iPhone, which he calls the iPhone M and we call the Apple iPhone 5C, will immediately outsell the full-priced Apple iPhone 5S. And while Milunovich expects the cheaper version of Apple's iconic smartphone to come out of the gate selling like hotcakes, it could still result in a huge drop in Apple's overall iPhone business.

Because the low-cost iPhone won't be launched until September, the analyst expects it to make up just 3% of Apple iPhone sales this year. But 2014 is a completely different matter. According to Milunovich, the iPhone M's first full year will result in 92 million units sold, or 53% of Apple's total iPhone sales next year. That would mean that the low-cost model would outsell the Apple iPhone 5S in 2014. And this is actually bad news for Apple and its stockholders.


With a lower profit margin than the phones that it would be replacing, the Apple iPhone 4 and the Apple iPhone 4S, introducing the low-priced Apple iPhone could actually be detrimental to Apple's 2014 earnings. He expects total iPhone earnings to be reduced by 1.4% next year or a drop of $1.6 billion in earnings. According to the analyst, Apple would be gaining market share at expense of its bottom line.

Despite cutting his 2014 earnings figure for Apple, Milunovich reiterated his "Buy" rating on the stock with a target of $500.


source: Barron's via BGR

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23 Comments

1. ihatesmartphone unregistered

Looking forward to this so-called low cost iPhone

3. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

Apple has officially lost their way. Jobs always knew Apple stood for quality if nothing else. Apple trying for marketshare when they will still pitifully lose that battle (still a million cheaper products versus your one cheap product) has the Apple brand soon to be associated with cheap, plastic and oh so nothing special. Cook I love ya man, you are running Apple into the ground faster than I could of ever hoped lol!

5. Commentator

Posts: 3723; Member since: Aug 16, 2011

They already started with the iPad Mini last year, but at least that still had premium design and feel, if not specs. It looks like Apple is regressing to the old plastic MacBook days.

15. anywherehome

Posts: 971; Member since: Dec 13, 2011

plastic or not plastic, Apple is becoming cheap, boring and outdated solution = are they going to end business in 5 years? they can not compete with Android now, iOS is not even able to copy a file or choose a default browser, no multi-user API, no microSD etc etc etc Apple is no longer precious........ the biggest mistake by Apple

12. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

Agree. Ever since Apple has taken the patent war on Android, they have managed to secure themselve bad publicity all year round and also lost their mojo in the process. Once its gone, they will have an uphill battle to get it back.

14. E.N.

Posts: 2610; Member since: Jan 25, 2009

I personally feel like the patent war, hasn't had any serious lasting effects on Apple publicly. Maybe a couple of months ago when it was all over not just tech websites but also popular websites and news, but its pretty much died down nowadays. I feel like the media coverage with things like Maps, production problems, battery problems, Lightning Cable not being USB standard, and the few features of iOS 6 were the major causes for Apple's slump. But there really hasn't been much talk of any of that anymore. Right now I think tech websites and most consumers are more focused on what Apple is going to bring in September as opposed to things like patent wars, Maps, and lightning cables. Recently, iOS 7 beta has already been the most downloaded beta iOS (by both developers and consumers alike) which is pretty good news. As long as the iPhone 5S/iPad includes some reasonable and worthy upgrades (combined with the release of iOS 7 and possibly a cheaper iPhone), this year could potentially be one of Apple's best.

13. E.N.

Posts: 2610; Member since: Jan 25, 2009

I'm actually impressed with the decisions Apple has been making thus far. Steve Jobs was a great CEO but he was somewhat arrogant and some might say his resistance to change actually hurt Apple i.e. iPhone 4S and support of Scott Forstall. Jony Ive's changes iOS 7 will do the company well and the iPad mini seems to be doing well too. There are just so many Android devices being made by too many different manufacturers, so I agree that leading in marketshare is not really a feasible goal. But with that said, its still important to maintain a strong presence in the market. Don't forget that Apple is still preferred by developers and is #1 in purchases via iTunes. They don't need to have the largest marketshare to maintain all that but losing too much marketshare can cause problems. Also a lot of the features like Facetime, iMessage, Air Share, Photo Stream, etc work better if you have more iOS users. Plastic is definitely not the ideal material, but lets just hope they execute it well.

16. joey_sfb

Posts: 6794; Member since: Mar 29, 2012

..apple dwelling market share and profit.. i am sorry what did you say again..

23. appleDOESNT.com

Posts: 456; Member since: Nov 19, 2011

Totally disagree. iOS7 has taken the skeumorphism identity that was SOLELY Apple and conformed it into a pastel colored, flat, bad looking Android theme. iOS7 has no identity to it like all iOS's before it. HUGE mistake, people don't like change, part of the reason people like iOS is it's soo familiar for so long. Plus, umm, the color scheme and look is just so teenage girly and all the frosty, blurry glass look effect is just painful on the eyes. Plastic iPhones? Cheaper prices? ya, ok. Apple stood for quality under Jobs, under Cook, he's trying to make Apple compete with the low end. Now tell me, how ya gonna do that with 3 products versus a million. Gates and Jobs are one of a kind legends, Balmer and Cook are just men chosen to replace said legends... and are soooo not nor eveeer will be even a fraction of those two.

2. Nathan_ingx

Posts: 4769; Member since: Mar 07, 2012

Did i miss something? I thought it was the iPhone C. When did iPhone M hit town??

4. darkkjedii

Posts: 31633; Member since: Feb 05, 2011

This Thursday it'll be the iPhone V

6. Commentator

Posts: 3723; Member since: Aug 16, 2011

A letter without a number doesn't make too much sense, and I wouldn't be surprised to see it be called the iPhone 5M or 5C.

11. ZettaiRyouiki

Posts: 39; Member since: Aug 05, 2013

They called it iPhone M because M stands for Money. That Cheap version of iPhone will bring in more money for Apple. If that 5Cheap model goes for similar price of the iPod touch, big money for Apple, but im pretty sure Apple will price it higher than that.

7. frydaexiii

Posts: 1476; Member since: Dec 01, 2011

Here comes the iPhone A,B,C,D...W,X,Y,Z

9. akki20892

Posts: 3902; Member since: Feb 04, 2013

I'm waiting for iPhone P

17. MrKoles

Posts: 368; Member since: Jan 20, 2013

It would be an iPhone P(ee) :D totally deserves this name

22. akki20892

Posts: 3902; Member since: Feb 04, 2013

8. tiara6918

Posts: 2263; Member since: Apr 26, 2012

Of course the low cost iphone will sell more than the iphone 5s. This is similar with how the ipad mini outsold the ipad4

10. downphoenix

Posts: 3165; Member since: Jun 19, 2010

I think some people misunderstand the reason for this model: It will likely be cheaper to make than an Iphone 5... so instead of making Iphone 5s to represent the 99$ price tier, do these instead. The 5C is basically the 5, but with cheaper manufacturing.

18. Topcat488

Posts: 1419; Member since: Sep 29, 2012

Apple should get out of the smartphone sector... Back in 2007 when the iphone first came out, most users were not into all that file moving and multitasking business... Now that's a minimum, but the iphone is still just a Apps Launcher, still stuck in 2007. iMacs' are great Tablets too, laptops excellent, get out of the phone sector.

19. boosook

Posts: 1442; Member since: Nov 19, 2012

Nothing will changeā€¦ they already sell the older model at a lower price for people who cannot afford the latest iphone, now they'll simply repackage it and sell with a new name. The move could also lead to more sales, because users will not realize that they are buying last year's technology. When the 5S will be released, instead of continuing to sell the iphone 5 at a lower price they'll sell it as the iphone 5C for an even lower price thanks to its cheaper case.

21. belovedson

Posts: 1061; Member since: Nov 30, 2010

People who buy iPhones generally do little research, bring up per-gingerbread issues, and are generally more entertained by what's in over what matters. The lower grade iPhone will flush the ridiculous priced in the resell market. Simply put, your going to see a crap load of American iPhones in other countries

20. belovedson

Posts: 1061; Member since: Nov 30, 2010

It takes an analyst to realize in this economy that working class people will choose a lower cost iPhone over a higher priced iPhone? Someone's I wonder about these people

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