Apple Said to Develop Cheaper IPhone Model for Late 2013

Jan. 9 (Bloomberg) -- Wedge Partners Principal Brian Blair discusses Apple's rumored less expensive iPhone. He speaks on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Apple Inc. (AAPL) plans to sell a smaller, cheaper version of the iPhone as soon as this year, said a person familiar with the plans, part of a push to gain customers in developing nations.

Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest, according to the person, who asked not to be named because the negotiations are private. Apple has spoken to at least one of the top U.S. wireless carriers about its plans, the person said yesterday.

Executives at Apple have been particularly interested in building a lower-cost model with less-expensive components as a way to appeal to customers in emerging markets, another person has said. More affordable iPhones would help Apple play catch-up with smartphone makers such as Samsung Electronics Co. (005930) using Google Inc. (GOOG)’s Android mobile software system. Android made up 75 percent of smartphone shipments in the third quarter, compared with 15 percent for Apple, according to IDC.

Natalie Kerris, a spokeswoman for Cupertino, California- based Apple, declined to comment. The Wall Street Journal reported yesterday that a cheaper iPhone may debut later this year.

Photographer: Andrew Harrer/Bloomberg

Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest. Close

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Photographer: Andrew Harrer/Bloomberg

Apple, which had been working on a more affordable smartphone since at least February 2011, is weighing retail prices of $99 to $149 for a device that would debut in late 2013, at the earliest.

Apple Chief Executive Officer Tim Cook has said China is a priority. The company generated $5.7 billion in sales in China in the quarter ended in September and sold more than 2 million iPhone 5s during its weekend debut there last month.

Strategy Shift

Adding a less-expensive version of the iPhone would be a strategy shift for Apple, which has until now tried to appeal to more budget-conscious customers by cutting the prices of older models. After introducing the iPhone 5, Apple kept selling the iPhone 4S and iPhone 4 at reduced prices.

The device would use cheaper parts and may be smaller than current models, people familiar with the plans said. Apple was also considering a more versatile version that would work on multiple wireless networks, according to people who were briefed on the plans.

Apple has sold more than 270 million iPhones worldwide. The device generated $80.5 billion in sales last year, accounting for more than half of Apple’s revenue.

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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