In a follow-up to his January report, Piper Jaffray analyst Gene Munster continues to believe that Apple will be releasing a cheaper iPhone by the end of 2013, presumingly made of polycarbonate plastic. He believes that the cheaper iPhone would be a huge hit in markets such as: Germany, UK, France, China, Brazil 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.”
In the aforementioned markets, the lowest priced iPhone 4 is 133 percent more expensive than the average low-end smartphone, the iPhone 4S is 48 percent more expensive than mid-ranged phones, and the iPhone 5 is 19 percent more than flagship phones like the Galaxy S3.
Munster believes that the cheaper iPhone could absorb much of the $135 billion market, which accounts for 60 percent, or 540 million smartphones Apple has not engaged in.
The analyst expects the Apple will debut the cheaper iPhone at a price of $199, with no contract, around September 2013. He expects that cheaper iPhone sales to be around 37 million units by the end of 2013, with 96 million units in 2014, and 170 million units in 2015.
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