UPDATED: Is Apple about to gamble with a cheaper iPhone?


UPDATED: Apple made it official today by launching a cheaper iPhone 5C in a handful of markets, as my colleague Kevin C. Tofel (among many others) reported. Engadget first reported the move yesterday; for my thoughts on why this is a very dangerous move for Apple please read on:

Bloomberg picked up on some fresh data from Ovum and Upstream late last week to report that Apple is the most desirable mobile brand in emerging markets, edging out Samsung. Ovum surveyed roughly 4,500 consumers in several markets including Brazil, India and China, and reported that 32 percent of respondents favor the iPhone, up substantially from 21 percent last year. Samsung was the top brand in last year’s survey but saw the the share of consumers in those markets who favor its handsets fall from 32 percent to 29 percent.

Meanwhile, Engadget reported today that Apple appears ready to launch an 8 GB iPhone 5C that will retail for roughly $85 less than the current 16 GB model. The publication cites leaked documents from O2 Germany and posted a photo of the handset’s packaging, rightly noting that if the gadget hits the German market this week “it’s probably going to launch everywhere else in the world, too.”

Apple’s decision not to compete in the low end of the smartphone market is clearly keeping the iPhone’s brand polished in emerging markets, but it also preventing the company from grabbing a huge share of those markets. Launching a marginally cheaper iPhone 5C strikes me as a very risky strategy in those markets — it isn’t cheap enough to attract a lot more users, and the limited memory may tarnish the image Apple has successfully built. An 8 GB smartphone may end up being a lose/lose for Apple in those promising markets.

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