Gene Munster thinks Apple lower priced iPhone could sell an additional 37 million units in 2013 and 96 million units for 2014 and 170 million units in 2015.
A Piper Jaffray analysis of global unlocked smartphone prices solidifies the firm's expectation that Apple will launch a low-cost iPhone later this year, with the new handset purpose-built to compete in the untapped market estimated to be worth $135 billion in 2013.
Following up on his report from early January , analyst Gene Munster on Tuesday reiterated his stance that Apple is likely to release a more affordable iPhone targeting developing regions like China and India.
"We believe a lower priced iPhone will be a positive for AAPL shares for two reasons," he writes. "First, despite its lower margin, it should accelerate gross profit growth given the size of the low-end market (we estimate $135B in 2013); second, investors have historically bought into AAPL ahead of major new product releases."
By taking available pricing in six international markets — Germany, UK, France, China, Brazil and India — Munster was able to come up with a snapshot of the low-cost segment. He notes that the lowest priced iPhone, the iPhone 4, is still 133 percent more expensive than the global average for a low-end smartphone, suggesting Apple is only skimming the top of the market.
As for Apple's other handset models, the iPhone 5 is 19 percent more expensive than comparable flagship handsets from rival manufacturers, while the iPhone 4S is 48 percent more than mid-range devices. This means that Apple's biggest gap in pricing is between seen in the low-end segment.
"This low-end segment is important given we estimate it is a $135B market in 2013 that Apple is currently not participating in," Munster writes. He notes the sector will account for 60 percent of smartphones, or 540 million units at a $250 average sales price.
In the core markets of China and India, the cost of an average low-end handset is $138 and $140, respectively. The iPhone 4 sells for an average of about 265 percent more in those countries. A similar report on Monday said Apple could triple its share of the addressable Chinese market and add billions of dollars in revenue by launching a low-end device.
Munster expects Apple to debut an affordable $199 iPhone in the September quarter and believes the company could sell around 37 million units over the remainder of 2013. That number would jump to around 96 million units for 2014 and 170 million units in 2015.
Rumors claim Apple is working on a device for emerging markets, with the unit built from low-cost materials like plastic..
MK maybe I have looked at the I-Watch the wrong way. I didn't see what it could bring that all the other Apple Products already have. Maybe just maybe the I-Watch is the lower end Apple phone they have been talking about. They are targeting lower end markets like India and the far East along with maybe some South American countries. That almost makes sense. I'm sure the novelty would also bring some sales in the other big markets. I'm probably wrong, but this scenario makes more sense to me, than a separate lower cost Apple I-Phone and a I-Watch. I guess we'll see. I am a little confused on their estimates for revenues, when they are predicting this won't come out until last half of year. We need a newer product in the March or April time frame.