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In today’s emerging mobile markets, budget smartphones are gaining popularity at an alarming rate. As we get closer to an age where affordable, efficient, and functional are all adjectives we use to describe phones, we have all the reason to wonder what took manufacturers so long to release them in the first place. We have seen HTC, LG, Samsung, and Sony invest resources in bringing affordable smartphones to emerging markets, so where is everyone else?

Granted, not all of these manufacturers had as many juicy rumors floating around at the time of their respective releases. In fact, we probably wouldn’t even be talking about a budget device unless it was something we actually wanted.

Now, out of the left corner, hailing from Cupertino … some would call it the fruit of their loins, others might call it the white one with Wi-Fis. But I simply call it the iPhone.

The latest manufacturer to succumb to rumors of a cheap alternative is none other than the most valuable company in the history of companies: Apple. Unfortunately for Apple, putting words like “budget” and “emerging markets” in the same sentence was not well received despite no official word of such a device even existing at the Cupertino camp.

Most recently, Phil Schiller had to calm Apple’s investors down after the Shanghai Evening News reported that Apple would develop a “cheaper” smartphone for the sake of expanding its market share. This did not sit well at all in Cupertino, or on the NYSE trading floor.

I’d have to side with Schiller and agree that the quote issued by the Chinese source was not the way to announce Apple’s Unicorn device. Though I’m a fan of the Rumor Dog’s work, I’m less than inclined to believe that any device should be announced the way it was. The quote edited by the same Chinese source reads, “We focus on making ‘the best products’ for customers and never blindly pursue market share.”

Not off to a great start then, are we lads?

Despite the rumors, we are still left with the typical interview questions like: “How will Apple be able to market a device as anything less than premium?”, “Why has it taken so long for Apple to acknowledge emerging markets and their desire for a budget alternative to Apple’s hero device?” and “What sort of features would Apple be willing to sacrifice to bring costs down and please investors, but not at the expense of marketability, or quality?”

And that’s what I’d like to talk to you about, Mr. and Mrs. Reader. What sort of features can the iPhone do without, if any at all?

Before I list the current features Apple is marketing with their latest flagship, here is the tagline on the iPhone homepage: “So much more than before. And so much less, too.” The word ‘less’ is obviously focused on the slim and svelte 7.6mm chassis that’s housing all of that fruity goodness, but in the context of this article, it’s too ironic not to mention.

On Apple's iPhone landing page, you will find the new iPhone hosts a bevy of new features, such as:

  • All new design. 18% thinner. 20% lighter. 12% less volume.
  • 4-inch Retina Display. It’s not just bigger. It’s just right.
  • Ultrafast networks. Connect to fast data networks. The world over.
  • A6 chip. Performance and graphics up to twice as fast. With battery life to spare.
  • All-new EarPods. Completely re-imagined from the sound up.
  • iSight camera. The world’s most popular camera now captures more of the world.
  • All-new Lightning connector. Smaller. Smarter. Durable. Reversible.
  • Maps. Take a turn for the better.
  • Siri. Even more of what you’re asking.
  • iOS 6. The world’s most advanced mobile operating system.
  • iCloud. Your content. On all of your devices.


The image above is a breakdown of research performed by iSuppi in the breakdown of individual components. (Click to enlarge.) And below are some of my ideas to save costs on a budget iPhone and deliver a product that won’t make investors writhe in agony:

  • Lose the 16GB, 32GB, and 64GB storage options and reduce internal storage to 4GB and 8GB to pitch iCloud.
  • Remove the matte aluminum chassis and replace it with a polycarbonate outer-shell just like its predecessors.
  • Ditch the 8MP sensor for the 5MP iSight camera in the new iPad and iPod Touch.
  • Eliminate LTE and offer separate chipsets and modems for different markets.
  • Swap the 4-inch Retina display for a 4-inch 480x800 display.
  • Reduce the length of the Lightning to USB cable.

 

That’s all I’d be comfortable recommending to Apple considering their brand image, business strategy, and marketing ploy. I believe costs could come down anywhere between $5-$35 per device, but obviously I don’t know anything about Apple’s current supply chain and that could be a conservative estimate. I just know they’ve managed to keep their profit margin at 68% and higher for the past two years, so I don’t think reducing it would keep anyone awake at night. In fact, people might sleep better if everyone had iPhones with Do Not Disturb at their bedside.

So, explain yourself, reader, and get comfortable, because this is no easy situation for the partially-bitten fruit company. Lets talk through it.

If you had you a say in the matter, what would you recommend Apple do with its marketing strategy for the iPhone 5’s thrifty brother? What features would you axe? Do you think Apple will stay above $500 per share if it releases a cheap iPhone, or do you think it’s game over if they do? If you don’t think Apple can get out of this situation without tarnishing its reputation, that’s understandable, but please tell me why in the comments below! Don’t forget to mention how much you think it will cost us consumers as well!

Image via iSuppli


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73 Reactions to this post

"Does a budget iPhone makes sense? Would you be interested?"


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Anonymous Ehh kinda but it ruins their reputation of a quality hand set builder, you gotta do what you gotta do to compete
Arash Negari iPhone meant to be a luxurious and expensive device just like all other apple products. There won't be a cheaper iPhone, If you can't afford one its not their problem, work some more and stop being cheap.
Arash Negari We already have cheap iPhones, they are called Androids.
Andre Anknown Lets do not talk about iphone, it's the worst smartphone
Tham Ye Yang Without Siri. It's useless anyway
Jimmy Allen Flash.... Both flash player and camera flash..... Android beat iPhone to it by years Big screen.... Again android had them LONG before icrap Expandable memory via sd card........ I crap still don't have it Siri...... Android had several long before....... Example jeannie
Jimmy Allen I love how I phone people are always like "I don't need that". When shown a new feature on an Android......... Then the next year or the one after when the newest iPhone finally gets that feature they are all like "I gotta have that". ( a fool and his money are soon parted)
Jimmy Allen Hell no..... Keep the price way up where only the rich can afford them so apples market share can continue to drop while android grows...... Bye bye I-crap
Miguel Sahagun Aaaaand the joke is now on @will
Sebastian Gomes Getting an iPhone doesn't make any sense to me anyways lol
Chase Ros To everyone saying Apple should lower the price of a previous generation iPhone - good idea.
Clay Asato The iPhone is already missing too many features; to chop more off would just be ignorant. Apple NEEDS to make the current iPhone cheaper. They need to make it more competitive. Most teenage android phone owners say that they don't like iphones because they are too expensive.
Brendan Breakdown Yes and no. iPad mini to me was a budget iPad, but in no where is it an iPad that's less in quality. Without a retina display it was more affordable, but still a very capable device.
Will Doyle Also, you're welcome Irvin- now put your shiny phone dick away and try to stay on topic.
Will Doyle Second thing: @irvin - I've owned both a Gs3 and iPhone. I prefer my iPhone for both style and functionality. As far as "accepting" anything concerning apple's financial future, I'm pretty sure you have as much insight as I do-which is nothing.
Will Doyle First thing: the topic was budget iPhone, not "why apple sucks" my point was in saying that most of the core features people actually use on their phones Ios or otherwise are essentially the same and don't require all the bells and whistles that accompany most phones today.
Smritha Venkataramanan no not really. . .:-\
Tyler Butler Why would they bother with a budget iPhone? Discounting last years model essentially does the same thing and they don't have to waste money developing another phone.
Luis Robles Figueroa No because I rather pay for good quality and last longer. Cheap equal no long term (lasting).
Jose Be Julme No & no.
Steven Pereira Apple is boring.... Making it cheap AND boring won't help.
Ryan Rees-Williams It might work IF: They also make the next expensive version absolutely incredible, get off your arse and innovate Apple or fall behind! If Nokia can do the amazing stuff they do on a lower market share than you then why wont you?
Dustin T. Robles I love apple always will but I'm getting the S IV when it's out I'd say lose face time limit the apps and smaller memory like 4 GB and 8 GB
Kevin Kaufman i thought the 5 was budget w/the 4' screen?
Irvin Zamora @Will D., so are you trying to prove a point? The fact is Android phones have surpassed Apple in the tech world. They have advanced in function and capabilities. They are reaching for the simple crowd as well. If you can't accept the fact that Apple is losing the tech game, there's something wrong. It's people like you that can't think outside the Apple bag, and see reality. It's not about Android people bashing Apple, it's about stating facts. No need to argue the old "Android vs Apple", as that has and always will be opinion based. It's not about being a bigger phone, it's about user control and function. So all that, your saying your happy with your basic iPhone 5 that does what it always has done since 2007. Great. Us android users will continue to flourish in a variety of selection, not being stuck to the same old stuff. Thanks.
Gwendolyn Suzanne Harris Kight No I wouldn't be interested in a budget iPhone at all. I love my iPhone 4S and can afford the iPhone so I don't need the budget one.
Will Doyle If you want to talk about marketing- how about being convinced that streaming video from phone to TV is necessary. Ooooh, ooh!!! Or how cool are you when you utilize NFC technology to do uh... Well... Uh..absolutely fucking nothing with. Or how absolutely necessary it is to have a blazing fast processor on your phone so you can... Play games faster? Watch porn more efficiently ? Or take AMAZING Instagram pictures of your food with...?
Will Doyle It's truly hilarious to see people carrying around a tablet sized phone w/ stylus, singing the praises of all the amazing glorious things their phone does just to check Facebook and watch YouTube videos.
Elijah David Kleehammer It's not necessarily about revolutionizing the market. It's about keeping pace with your competitors. Apple can't even keep up right now.
Will Doyle So which company revolutionized the industry since then?
Sean Watson Will Doyle, you're right. Apple did change the industry. 6 years ago. The problem is that then the industry keeps evolving, growing, and working together to benefit tech development, and apple stays the same, and keeps trying to sue everyone else to try to make up for how stagnent they have become.. windows phone, android. They all blow apple out of the water, and apple can't compete, and they just blow all their ad money on panoramic photos, and noise cancelling speakers. Stuff most other phones just do cuz it makes sense, and dont feel the need to advertise. Now were left with millions of sheep that think apple invented the panoramic photo. Gimme a break
Sam Rick No its for old or dumb people....I want the latest and greatest.
Mauka Side No. It's unnecessary.
Will Doyle So I guess if you own a Gs3 or note- every other android device "sucks"
Chris Kang no, just take an older iPhone and sell it, bam, there's your low end
Nic Kolas dont have much to begin with =P
Will Doyle But your phone from a retailer next time. Sounds like you got conned
Will Doyle To me the term outdated only applies when what you have doesn't do what you want or need it to do
Micheal Williams Iphone SUCKS i just bought one from a friend awhile ago...Phone was working great for a good 5 days then all of a sudden the damn thing wouldnt even power back on... Another friend told me it could be the battery but Hell I refuse to pay a lousy 80 bucks for apple to put in another freaking battery on a phone i just bought was in perfect condition :( iphone's suck!
Will Doyle @jesse- yes, they did. I just find it shocking how people look at phones like its a dick measuring contest. What do you wanna do next-Race our cars at a stop light?
Jim Sowell Wouldn't get one if it were free
Humza Ahmed Windows Mobile OS, Palm devices and Blackberrys were real smart phones, they were technical but ordinary people could still use it, some of these OSes are now gone, but Android continues that legacy, Android is for real smartphone owners, Apple took the word Smartphone and dumbed it down, and kinda made it look like a feature phone.
Fernando Lopez In the untied states it make no sense what so ever but in emerging markets in other parts of the world where they have time pay full price for a phone and 500 or 600 is to much. So they are trying to get into that market
Odin Johnson Why even ask this question? Apple will let themselves go bankrupt before making a budget phone.
Joseph Alan Richardson What features?
George Majao The iPhone is ok the way it is now.
Derick Williams What features can they cut? If they cut much more it won't have a screen!
John Resch I thought they were budget low end products..
Jesse Huertas @Will I think you can make a case that Palm and Blackberry changed the industry and how we look at phones and what they can do. Apple just made it prettier
Tavonte G Drakeford Down goes iPhone hahaha smh overrated phone always crying about features until they get em, but by then it's already too late
Jake Gregory If it wasn't the fact that the iPhone feels like such an expensive phone, and when people see you with one, they know you've spent some real money on it, the iPhone wouldn't sell as well as it does. Having a phone like that is a status symbol, no one would buy a plastic iPhone... and I don't believe for one second that Apple would allow themselves to make one; as money grabbing as they are.
Will Doyle Also I love how people say iPhone sucks- compare one iconic phone that changed the industry to the hundreds of crap ass android devices that were developed to compete with it.
Will Doyle I don't really understand why phones have to be so jammed packed with features anyway. Aside from the obvious phone functionality, the only features I use consistently are a web browser , music player, and GPS. As long as those 3 things are reliable and easy to use, I'm good.
Chastity Lynn Donoho Iphone sucks
Herbert Salamánca Ramos No, and still you will pay a premium for a 'cheaper' iphone w/ lesser features. Doesn't apple know that people are smarter now & there are alot of better choices around. did i say iphone sucks?! :p
Gordon Christie Wouldn't take if it came with free cash
Jeff Jacques They have to decided what matters more: margin or market share. Almost impossible to own both. As to comments above, what ails Apple, still in the top 2 most valuable companies in the world, is an updated iOS. Not fringe technology without practical applicability
Lance Tomlinson It can't afford to lose features seeing as they don't have enough features to begin with. Comparing to android, I don't even consider them smart phones anymore, just an iPod with phone functionality.
Julie Rybowiak-Healy Galaxy S3!!!
Jordan Williams They already have two,the 4 and 4s. Its not like there really is any difference between the 3 of them save for a marginally faster processor. Silly apple, diluting your brand is only another step on your road to irrelevance. Many people buy apple products because they think because they have more money to spend on a product it makes them more special. Now everyone will have that same product. Lol
Miles Justin McNairy Regular iPhone 5: $199, $299, $399 Budget iPhone 5: $189, $289, $389 Yea that my prediction, but anyway iPhone suck because they way behind technology and introduced old features that almost all android phones already have. Nothing innovative about the new iPhone 5
Ricardo Contreras Jr. IPhones are always behind in technology, so a budget iPhone would be even more outdated.
Abram Wenevermet Dennis Not really.. anyone on a budget would just buy one of those cheaply made Android phones.
CeeGii Borels why Apple is dieing... people can now have a Smartphone experience without overpaying so less people are motivated to pay too much
David Piepho No iphone makes sence ! They are outdated.
Daniel Sanchez It's called an iPhone 4 or 4S.
Jonathon Downie I'd rather pay the extra money if it means a premium product. Age-old saying is you only get what you paid for!
Tabib Rehman I like iphones but ios is soo boring thats why i got rid of mine after owning one of a short while
Chris Hagood They really don't have any features that they would need to cut, especially considering the iPhone 5 only costs around $150 to produce. Probably just underclock the processor or go down back to an A5 and use more plastic and sell it unlocked for $299 with 8GB and $399 16GB. It's not even a thin profit margin, that's still a money-making device.
Peter Blanco Does an iphone make sense?
Vicente Reyes Um that's easy, buy an older version, its really simple. Otherwise your paying too much




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