The Only Hope For Apple

via John Gruber. Lorraine Luk, The Wall Street Journal:

“The only hope for Apple and its suppliers is the possible launch of a low-cost iPhone later this year, which may help the U.S. company to gain market share in fast-growing emerging markets such as China,” said Capital Security analyst Diana Wu.

Look at what Apple has done in the last 15 years. Does it look like Apple has been going after market share? No. Sure, Apple enjoys its market share growing as much as the next company, but for Apple it’s merely a side effect.

I don’t know whether Apple is working on a low-cost iPhone or not, but Apple has made transparent its low-cost iPhone strategy since introducing the iPhone 3G: With each new iPhone version the previous version receives a price reduction. The iPhone 5, like all previous iPhones except for the original iPhone, started off at US$199*. When the new iPhone comes out the iPhone 5’s price will drop to $99. The low-cost iPhone? Seems obvious: the $99 iPhone 5. And the iPhone 4S becomes the free iPhone.

One last point: Even if Apple’s existence depended entirely on the iPhone why would a low-cost iPhone later this year be Apple’s only hope? I was under the impression Apple was making a tidy profit from selling iPhones.

* With a new two-year contract, of course.