Apple may build less expensive iPhone

BY MICHAEL LIEDTKE Associated Press
Thursday, January 10, 2013
1/10/13 at 4:27 AM

SAN FRANCISCO - Apple is trying to decide whether it makes sense to offer a cheaper iPhone as it tries to boost sales in less-affluent countries and reclaim some of the market share lost to cheaper phones running Google's Android software, according to a published report.

Wednesday's report in The Wall Street Journal speculated that Apple could lower the iPhone's price by equipping the device with an exterior that costs less than the aluminum housing on current models.

A cheaper iPhone could come out as early as this year, or the idea could be tabled for future consideration, as has previously happened. Citing unnamed people familiar with the matter, the Journal said Apple began assessing the pros and cons of making a cheaper iPhone in 2009 and has periodically revisited the notion. Apple Inc. declined to comment to The Associated Press.

Apple so far has stuck with an approach that has stamped the iPhone as the gold standard, a device that warrants a higher price than other smartphones. Under this tack favored by Apple's late CEO, Steve Jobs, the company sells a premium-priced iPhone that has been updated annually with new features since its 2007 debut.

In an attempt to appeal to more budget-conscious consumers, Apple has been selling older models of the iPhone at discounts.

The latest iPhones start at $199 in the U.S., but those prices are subsidized by wireless carriers, which figure they can make up the costs through monthly service fees over the life of a two-year contract.

The unsubsidized prices start at $649. That is proving to be too much for many people looking to stay connected on the go, prompting them to snap up more affordable smartphones, including Android devices made by Samsung Electronics Co. and others. Google Inc. doesn't charge for the Android mobile operating system, making it easier for device makers to undercut the iPhone.

Android devices accounted for 75 percent of smartphone shipments during the three months ending in September, up from 58 percent at the same time in 2011, according to the research firm IDC. The iPhone's share stood at 15 percent in September, up from 14 percent in the previous year.

Original Print Headline: Report: Apple considers making cheaper iPhone

Smartphone system market share

Here are the top smartphone operating systems based on worldwide unit sales and market share in the third quarter of 2012, according to research firm IDC. Fourth-quarter figures have not yet been released.

Android (Google Inc.) - 136 million units, 75 percent share (57.5 percent a year earlier)
iOS (Apple Inc.'s iPhone) - 26.9 million units, 14.9 percent share (13.8 percent a year earlier)
BlackBerry (Research in Motion Ltd.) - 7.7 million units, 4.3 percent share (9.5 percent a year earlier)
Symbian (mostly used by Nokia Corp.) - 4.1 million units, 2.3 percent share (14.6 percent a year earlier)
Windows (Microsoft Corp.) - 3.6 million units, 2 percent share (1.2 percent a year earlier)
Linux - 2.8 million units, 1.5 percent share (3.3 percent a year earlier)

Associated Images:

A customer examines an iPhone 5 at a store in Seoul, South Korea. Apple Inc. is considering a plan to offer a cheaper iPhone amid intense competition for phones run by Google's Android system, according to a report in The Wall Street Journal. Bloomberg file