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Analysis Phones

Apple's rumored low-cost iPhone XR may be the most intriguing iPhone

Life should get a little easier for Apple fanboys reluctant to spend a fortune on their next phone.

Sarah Tew/CNET

A year after Apple made huge -- but pricey -- changes to its smartphone lineup with the iPhone X, it may finally have a redesigned, cheaper phone for the rest of us.

The company plans to host an event at 10 a.m. PT on Wednesday at the Steve Jobs Theater on its campus in Cupertino, California. During the event, it likely will introduce three new iPhones, according to media reports. Two of the models, rumored to go by iPhone XS and iPhone XS Max, will include all the new bells and whistles. But for once, the most intriguing model out of the trio may be the most affordable.

Apple is expected to introduce a device that looks like the iPhone X but uses cheaper components, like an LCD display instead of a more vibrant OLED screen, to keep the costs down, according to Bloomberg. Its rumored name, according to the publication, is the iPhone Xr. The publication said the new device will sport multiple colors and feature aluminum sides instead of stainless steel like the iPhone X.

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It will reportedly feature a "near" 6.1-inch screen, which would make it larger than the iPhone 8 Plus, the iPhone X and its rumored successor, the iPhone XS -- a break in the typical dynamic that bigger automatically means more expensive.  

This new model is a signal that while prices for super-premium smartphones like the iPhone X and Samsung Galaxy Note 9 are rising higher than ever before, even a company with as loyal a following as Apple needs to do more than just target the affluent. The iPhone X may be a hit, but globally, Apple is starting to see its market share erode as more affordable options from the likes of Huawei, OnePlus and Xiaomi catch people's attention.

Let's face it: Being an iPhone fan has been tough unless you were willing to fork over $999 -- or more -- for the iPhone X. If you wanted one of Apple's smartphones last year but couldn't splurge for the iPhone X, you were stuck buying the iPhone 8 or iPhone 8 Plus -- phones that sport a design first introduced in 2014. You also didn't get access to Apple's Face ID technology, the marquee new feature from last year.

This new, "budget" iPhone X-style phone likely won't be cheap, with analysts pegging it anywhere between $699 and $849, but it's a far cry from dropping a grand or more on the latest and greatest from Apple. The larger display and likelihood that it will also get Face ID makes this an attractive option for consumers not willing to go big on their next iPhone.

"It's a good way for Apple to get people with older devices, like the 6 and 5S, to upgrade," Creative Strategies analyst Carolina Milanesi said. "It will feel like they have a device that's modern because it will look like one of the new ones but not have the cost."

Apple declined to comment.

Tough competition

Apple, which became the US' first trillion-dollar company in August, has been soaring over the past few years. The company's fiscal fourth-quarter revenue projections indicate it's optimistic about the phones expected Wednesday.

While its phones have proven tremendously profitable, they're not always blockbusters around the world. Some of its phone rivals are seeing even bigger increases in device sales. In the June quarter, Huawei overtook Apple to become the world's second largest phone vendor, according to various analyst tallies.

The Chinese phone maker, which has all but been shut out of the US market, shipped 54 million handsets in the quarter, up 41 percent from the previous year, researcher Canalys said in August. Apple sold 41.3 million iPhones in that quarter, nearly flat compared with the previous year's 41.03 million.

"The importance of Huawei overtaking Apple this quarter cannot be overstated," Canalys analyst Ben Stanton said. "It is the first time in seven years that Samsung and Apple have not held the top two positions."

He added that Apple and chief rival Samsung both need to make their portfolio "more competitive," especially when it comes to price.

Not a low-cost phone maker

Apple has shown a reluctance to round out its family of products. It would rather sell fewer phones at higher prices than ship millions of cheap devices. There's the iPhone SE, which uses older specs and a small body, but Apple's line-up of older devices means you should look there for bargains.  

In its fiscal third quarter, which ended in June, the average selling price of iPhones climbed to $724 from $606 a year earlier. That means that a lot of us have been happy to go along with those big price increases.

Prices have gone from $649 for the entry-level iPhone 7 in 2016 to $1,149 for the larger-capacity iPhone X last year.

Apple's rivals typically sell most of their devices for much less. Samsung's smartphone average selling price totaled $373 in the second quarter, while Huawei's was $278, according to Canalys. But some of the cheaper phones Huawei has launched still have higher-end components.

Despite the cheaper iPhone option, Apple isn't going the route of its rivals. It's expected to push its iPhone pricing even higher for some models. Apple's two higher-end models will sport crisper, pricier OLED displays, improved dual cameras, glass backs and stainless steel edges, Bloomberg said. One, the 5.8-inch model, won't have many visible changes but will pack a faster processor.

The other will have a 6.5-inch display, according to Bloomberg, making it one of the largest smartphones on the market. By comparison, Samsung's new Galaxy Note 9 has a 6.4-inch display. That device's biggest changes will be more noticeable in software, like the ability to look at content in apps side by side, the publication said. The larger phone likely will start at $999 -- or higher.

"Since the iPhone X has been the best-selling iPhone this year, despite the $999 starting price tag, we believe Apple understands consumers are willing to pay for a superior device and user experience," Morgan Stanley analyst Katy Huberty noted.

Where's the iPhone SE?

Apple's past attempts at making less-expensive phones has yielded mixed results. The company introduced the plastic and colorful iPhone 5C in 2013, but it wasn't cheap enough to attract price-sensitive buyers nor flashy enough for everyone else. Apple never made a second version of its C device.

Samsung, which also faces pressure from lower-cost phone vendors, has been able to remain the top dog because of its well-rounded portfolio. On Friday, it said its midtier Galaxy A6 will cost $360 when it hits the US market on Sept. 14. It's just the latest in myriad products that cross a wide range of prices.

"Consumers are increasingly looking for innovative features and high-quality hardware in midtier mobile devices," Samsung said in a press release announcing the phone.

Apple has seen more success with the iPhone SE, its smaller-screen, less expensive phone. The company released the 4-inch iPhone SE in March 2016. At the time, it was a throwback to Apple's older iPhone designs and was the option for people who wanted a smaller screen than the 4.7-inch iPhone 6. The following year, it boosted the storage options but kept everything else the same.   

"Apple is due an overhaul at the low end of its portfolio," Stanton said. "iPhone SE has undoubtedly reached end of life."

It's unclear when a successor to the iPhone SE may appear -- perhaps a surprise appearance on Wednesday? Until then, this new lower-end iPhone X successor, as well as a discounted iPhone 8, may be the only legitimate budget options.

Being an Apple fanboy ain't cheap.

Update, 10:16 a.m. PT: To include additional background info.  

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