Pssst! Wanna buy a cheap(er) iPhone?

Don’t care if your next  iPhone has retina display or that its case is made out of plastic instead of glass? And you’re rather not fork over nearly $700 for an unlocked, contract-free model?

Apple might soon have something just for you.

The  cheaper-iPhone rumor mill is (again) on fire, with several analysts reporting that Apple is on the verge of releasing a less expensive iPhone, as well as a refreshed iPhone 5S sometime this year.

First up is Amit Daryanani of RBC Capital Markets. In a note to investors, he said we can expect “multiple new phones” from the Cupertino tech giant between June and July. And one of those will be a more affordable but scaled-down iPhone. He writes that the phone will feature “plastic casing and no Retina display.” And in the process, he says, Apple could get a swift kick to its bottom line:

The low-end iPhone will have the same 4″ form factor as the iPhone 5 but will have plastic casing and no retina display… The product may have lower GMs than iPhone 5/5s but should be accretive to AAPL’s corporate GMs of 38%. Hence, we estimate this could contribute $22B in revenues and $5.00+ in EPS in CY14E, which suggests the product could be worth $50+ to AAPL’s stock price.

The global market for a more moderately priced iPhone is huge, he says:

Apple is going to capitalize on the low-end Smartphone market by launching a new phone that will address what we consider to be a ~500M total addressable market in CY14. In our view, AAPL should be able to quickly penetrate this market up to and beyond the 15% mark in the medium term (we estimate AAPL has 40%+ share in the premium market).

And he’s not alone in his prediction. Credit Suisse’s Kulbinder Garcha writes in a note to investors:

  “Our checks in conjunction with our Asian team point to Apple not only refreshing the iPhone 5 mid-year but also a specifically targeted low-end iPhone. We believe in aggregate this a positive as it can sustain top and bottom line growth (giving upside to our FY13/14 EPS of $44.92/$54.03), deal with the competitive ecosystem and volume threat from Android/Samsung and continue to drive growth in Apple’s installed base.


Patrick May Patrick May (341 Posts)

With more than 30 years on the front line of daily American journalism, I'm currently a staff writer with the San Jose Mercury News, covering Apple and writing people-centric business stories from Silicon Valley.