America’s best selling phones are due for an upgrade – with the iPhone 5, complete with larger screen, expected to launch in the coming weeks. Unsurprisingly, Apple‘s fifteen month old iPhone 4 will also be hit by cost cutting and price drops around the same time and Apple is reportedly producing a lower-cost, 8-gigabyte version of the iPhone 4 hardware.
This is similar to their strategy last year when the 8GB 3GS remained on the market for reduced prices after the iPhone 4 was released.
Apple has always targeted the high-end consumer by charging slightly more for the promise of product quality. In their report, Reuters poked at Apple for “jeopardizing their profit margins” with a rumored price drop of the iPhone 4 – a product that has continued to put up huge sales numbers for the past four quarters.
Apple loyalists won’t likely be interested in the 15 month old iPhone 4 price drop once the iPhone 5 is released – since they’re looking forward to the newest Apple gadget. However, Apple is targeting the low end emerging market consumer with the iPhone 4 price drop – just like it wasn’t when it dropped the price of the 3GS. The iPhone 3GS is already in that price range with some carriers offering them for as little as $0 to $50 on contract.
Reuters spoke to Bonnie Chang an analyst at Yuanta Securities about the rumored price drop.
“Apple may want to push into the emerging market segment, where customers want to switch to low- to mid-end smartphones from high-end feature phones, which usually cost $150 to $200. But I think for an 8-GB iPhone 4, the price is hard to go below $200, so Apple will still need a completely new phone with low specifications for the emerging markets.”
While a sub-$200 iPhone is possible, that market is laughable compared to expanding the phone’s reach into untapped countries. Their product is grabbing huge market share where it is sold – so they need only to make it more readily available. Rumors have previously suggested that Apple has been in talks with China Mobile, the world’s largest mobile carrier, to arrange a partnership to launch newest iPhone and now Sprint, one of the remaining two U.S. mobile carrier’s without the iPhone, has been rumored to be receiving the iPhone 5 as well. With a market like China Mobile still unrealized, Apple has a lot of room to grow – even at the current price point.
That’s not to say that a price drop on the iPhone 4 won’t have any affect on sales or profits, but Apple’s release schedule is perfect to ensure an up-sell to the newest hardware. Apple releases and markets their newest product, while continuing to sell last year’s model at a now lower price. The substitution of an 8GB flash drive in the older hardware makes way for use of the 16GB flash drives in the newer phone – which will likely reduce costs for the company overall. Buyers that are hesitant to spend $600+ on a brand new iPhone will be tempted when offered an older model iPhone with reduced memory for carrier subsidized prices of $100 or less.
So what does the price drop mean for gamers? It means lower priced access to the Apple App Store and the growing selection of awesome iOS games. The iPhone 4 hardware is more than capable of Unreal Engine graphics – which is now available free to non-commercial developers. The Unreal technology was put to use in the visually amazing and fun swipe and magic title, Infinity Blade. Not to mention, the gyroscope adds an interesting and immersive element to first person shooters or augmented reality games. The iPhone 4 is an overall great product and a cheaper version means putting more iOS titles in the hands of gamers around the world.
Are you interested in a reduced price 8GB iPhone 4? Or are you too excited for Apple to release the yet to be announced iPhone 5?