Apple’s budget iPhone – what could it mean for the smartphone market?

iPhone model

It’s widely acknowledged that there’s been one key driving force behind the rise of the smartphone over the last few years – and that’s been the technology industry’s 800lb gorilla: Apple.

The iPhone series has sold hundreds of millions of units all over the world since arriving on the scene in 2007, and each new addition still generates excitement among Apple’s huge global fan base. However, there have been suggestions that the general uncertainty surrounding the global economy has started to take its toll on sales, prompting speculation that Apple may be about to unleash a cheaper version of the iPhone.

Reports from Bloomberg and the Wall Street Journal have suggested that – citing unnamed individuals close to developments – Apple is working on a lower-end iPhone, resembling the standard device but using less expensive parts. For example, while the standard iPhone 5 has an aluminium case, it has been suggested that one option under consideration is to house the budget iPhone in a shell made of polycarbonate plastic. Speculation has suggested that while the idea has been under consideration for a number of years, it has gathered momentum in recent months and could even be launched by the end of the year.

It’s clear that Apple’s market share has started to come under attack from some of its lower-cost rivals. Google’s Android platform in particular has eaten into Apple’s share of the worldwide smartphone market, powering a range of cheaper smartphones. In the third quarter of 2012, Apple’s share of worldwide smartphone shipments stood at 14.6 per cent – down from a peak of 23 per cent in Q1 2011. Samsung’s share, by contrast, soared from 8.8 per cent in Q3 2010 to 31.3 in the third quarter of 2012.

In addition, Apple also cut orders for iPhone 5 devices towards the end of 2012, suggesting that sales of the handset – which was launched to great media fanfare earlier in the year – had been somewhat weaker than expected. One advantage that Samsung has over Apple is that if offers a range of smartphones at various price points, allowing it to target consumers with different levels of buying power. This is one of the key factors behind the South Korean firm’s rapid growth over the last couple of years. If Apple is to regain its momentum, then, it’s clear that it needs to do something to challenge its lower-budget rivals – because if it doesn’t, it risks being left behind.

In terms of what the launch of a cheaper iPhone would mean for the smartphone market, it’s difficult to say with any real certainty at this stage. After all, Apple is yet to confirm that it definitely intends to move ahead with the plan, or indeed that it’s definitely working on it. However, it’s possible that if Apple does move into the lower end of the market, it could prompt a race to the bottom of sorts, with other manufacturers looking to outdo one another in launching budget smartphones. While this might not result in too many new technical innovations – it’s likely these cheaper devices would be largely scaled-down versions of other phones – it could at least help to ease some of the pressure on already-stretched consumer budgets.

This post was contributed by tech news blogger Dale Wright from The Snugg, an iPhone and iPad case specialist.