The Budget iPhone: A Risk for Apple?

The Apple rumor mill is currently working overtime with reports and leaks related to a new low-cost iPhone. In recent weeks, various photos have emerged, including the rear view of a plastic iPhone in a range of colors, as well as a pile of plastic boxes for an “iPhone 5C.”

While there’s nothing to guarantee that there’s any truth to the rumors, when the web-based chatter reaches this volume, there’s usually some level of fact in play. Prior to the launch of the iPhone 5, the bulk of the leaked information proved to be right, so it’s not unreasonable to assume that some of the reports that we’ve heard about the budget iPhone are correct.

Budget iPhone

Assumptions

Let’s assume that most of the rumors we’ve heard are true. What other assumptions can we hypothetically make about a new budget iPhone? Here’s what we could expect.

  • It will run iOS 7, because Apple’s hardly going to release something new that runs an old operating system, obviously.
  • Storage options will be similar, although there may be a return of the low-capacity 8GB model that’s been dropped since the release of the 4S.
  • It will have the same aspect ratio as the iPhone 5, although it may not be a retina display.

As we’re now playing the assumption game, let’s also assume that the cost of the budget iPhone is roughly half the cost of an iPhone 5. (A SIM-free 16GB iPhone 5 is $649 in the US right now, making our hypothetical budget iPhone cost around $325, which is broadly in line with internet rumor).

What will you get for paying double the price?

  • Potentially a little more storage space
  • A higher-resolution camera
  • A retina display
  • A phone built with higher-quality materials

So what’s my problem with all of this? My main problem is that aside from the points above, consumers still get an iPhone after paying half the price. Most everyday consumers don’t even know how many megapixels their camera has, nor do they probably care. Furthermore, the lack of a retina display will most likely have no bearing on sales, as the lower-quality display has done nothing to stop the iPad Mini selling by the boatload.

We’re then left with the materials. The materials that have made previous iPhones seem luxurious and desirable are the same materials that result in expensive repair bills from disastrous smashed shells and screen incidents. With this in mind, I have to wonder if, when I go to buy my next iPhone, I’ll decide to buy one that costs half as much. More importantly, it will still only cost half as much when I have to replace or repair it.

Conclusion

I welcome the possible release of a low-cost iPhone. I also fully appreciate that there will always be plenty of people who simply have to have Apple’s flagship phone. This is, of course, made easier for consumers in countries where handsets are network-subsidised.

However, I can’t help but wonder whether Apple is underestimating how many people just simply want an iPhone and aren’t that bothered about specs and materials. While a budget iPhone will undoubtedly sell to millions of people who haven’t been able to afford one before, it may also encourage existing iPhone users to “downgrade” the next time they “upgrade.”

  • Ben Jardine

    Good article Ben.

    As someone with only minimal experience of any iPhone, I am not best placed to comment with any authority really.

    I have Samsung’s Galaxy Mini, provided as a work phone, having previously enjoyed the all round greatness of the S3. The inferiority of the Mini as a budget offering is immediate and profound. Under resourced and with a distinctly primitive look and feel, you certainly know you are working with a lesser product.

    It does what it says on the tin, well cheap plastic, though, and you get what Android provides as an OS, albeit more slowly and less fluid.

    Back to Apple. I would agree that there will be a market for that group of consumers who just want an iPhone, regardless. I am not sure though, that this group is large enough in comparison to the group who just want the latest and greatest (?) iPhone irrespective of the cost. I think it could prove an own goal with “budget” models languishing in the phone stores as the premium versions fly out of the doors as they have done with each new offering in the past.

    Finally, I would only comment that it is quite simple to get hold of second hand premium iPhones, in near out of the box condition, for approximately the same amount of cash you are surmising that a budget iPhone will be priced at. If you just have to have an iPhone no matter what, but can’t afford $650 or equivalent in your home currency, maybe a nose around eBay would not be out of the question?

  • Donny Yankellow

    Apple has always said if they are going to lose sales of one of their products they want to lose it to one of their own products. If that is what a cheaper iPhone does I don’t think they are worried.

    I am like you. If the phone has enough storage and is a good enough camera that will be my next phone when my contract is up. I even like how it looks better than the 5 (assuming the rumors are true).

    I do think it will have a retina display, Even the iPod touch has that. I think it will be the current 5’s camera (assuming the next model has a better one) and processor and that will be the main difference. If the new phone has a killer feature it won’t be in this one. The question is will it be reduced storage or have 16 and 32gb options?

    We’ll know soon….