Apple Plans ‘to Release Cheap iPhone 4 Within Weeks’

Apple plans to release a cheaper version of its iPhone 4 within weeks, jeopardizing profit margins to win lower-end customers from rivals such as Nokia in China and other emerging markets.

New Apple rumors say a less expensive, 8GB iPhone 4 could arrive within weeks. Reports suggest that the model will appeal to lower income families and countries. Photo: Daniel/Flickr

There have been rumours for some time that Apple Inc. would release two iPhones later this year: a new version of the iPhone, probably to be called the iPhone 5, and a cheaper model.

The latest Apple rumors suggest that a new, cheaper iPhone 4 is on the way. “Totally expected,” said Ezra Gottheil, an analyst from Technology Business Research, of the news – first reported by Reuters today that Apple will launch a “lower-priced” version of the iPhone 4 “within weeks.”

According to a report from Reuters, the cheaper version will be an iPhone 4 with 8GB of storage. The iPhone 4 currently comes with 16GB or 32GB of storage.

In theory, the decreased storage will be less of a problem because Apple’s new iCloud service allows users to store media and other files on cloud-based servers.

The new phone will be launched “within weeks”, according to Reuters, which cited “two people with knowledge of the matter”.

Is any of this surprising? Not in the least because the Cupertino, Calif., tech giant has already made the same move with its iPhone 3GS when the iPhone 4 first hit stores a little more than a year ago.

The iPhone 3GS was bumped down to 8 gigabytes of memory and currently sells at $49 with a two-year contract from AT&T.

The iPhone 4 which displaced the 3GS as Apple’s latest and greatest iPhone, took over the iPhone 3GS’ price points and memory options – 16-gigabyte models for $199 and $299 for a 32-gigabyte handset, each with a two-year data plan.

When Apple Inc. introduces a new iPhone, which has been rumored to be in late September or October, it would make a lot of sense that the current iPhone 4 would get a price and memory drop.

A move such as this would be merely a repeat in strategy for Apple. (Meanwhile, iOS 5, the new version of Apple’s operating system for iPhone, iPod touch and iPads is expected to launch at the same time.)

But, if Apple’s strategy stays the same, the $49 iPhone 4 with 8 gigabytes of memory would require a 2-year data plan.

What could possibly be new, if Apple actually does this, is creating an even lower-cost version of the iPhone 4 with not only less memory, but also cheaper materials and maybe other downgraded specs.

This move would allow Apple to sell the retooled iPhone 4 for $200 or less without the need for an expensive data plan to go along with it, giving consumers more freedom to find a carrier and service plan they want, Reuters also said in its report.

Why would Apple want to do this? Analysts who spoke to Reuters speculated that Apple wants a lower cost iPhone to offer to emerging markets where the current iPhone is unattainable due to its price, which is only as low as it is with a contract due to carrier subsidies.

“Apple may want to push into the emerging market segment where customers want to switch to low- to mid-end smartphones from high-end feature phones, which usually cost $150-200,” Yuanta Securities analyst Bonnie Chang told Reuters.

“But I think for an 8GB iPhone 4 the price is hard to go below $200, so Apple will still need a completely new phone with low specifications for the emerging markets,” he added.

So what about the iPhone 5? As stated above, the latest Apple rumors point to an October 7 release, with preorders in late September.

It may come in a new “tear drop” shape, could include an NFC chip for credit card-like purchases, and probably won’t come with a 4G LTE antenna.

It’s also expected that the new iPhone will have a faster processor – the same A5 processor that powers the iPad 2 – an improved camera and, possibly, a larger screen.

But Apple rumors are slippery things. The only people who can truly confirm them are Apple CEO Steve Jobs and company itself.

In previous years, Apple has announced the new version of the iPhone at its Worldwide Developers Conference (WWDC), which takes place in June. This year’s WWDC was a software-only event, however. [via Reuters, LA Times and CS Monitor]

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