Apple could unveil iPhone Mini this summer, says analyst

Launched in China, a lower-cost iPhone might triple Apple's potential market share in the country, says a Morgan Stanley analyst.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
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Is an iPhone Mini due out this year?
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An iPhone Mini priced at $330 in China would provide a healthy shot in the arm to Apple's Chinese smartphone sales, according to Morgan Stanley analyst Katy Huberty.

A low-priced iPhone would add another 20 percent to the 10 percent Chinese market share currently addressed by the iPhone 5, the analyst said today. Smartphone prices are starting to stabilize in China, which will open up the market for such a phone. But a deal with China Mobile is also key.

Apple currently sells the iPhone to Chinese consumers through China Unicom and China Telecom. The company has been trying to cook up a deal with China Mobile, the country's largest carrier, but has run into stumbling blocks.

Still, the analyst sees China Mobile as a major contributor to the growth of the iPhone, citing a few different factors. First, Apple would launch a new Mini model. Second, legislation for TD-LTE licenses and number portability could pass later this year or in 2014. And third, China Mobile would be more open to subsidizing higher-end smartphones on a TD-LTE network.

"We believe Apple could launch iPhone Mini at $330 (about Rmb 2,000), in-line with flagship products in China from Lenovo, Huawei, ZTE, and Coolpad," Huberty said in an investors note out today. "Even in a scenario of low 40 percent gross margin and 1/3 iPhone cannibalization rate (flattening legacy iPhone shipment growth), which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars."

The $330 would be the unlocked price for the phone in China. Launching over the summer, the iPhone Mini would target other emerging markets beyond China, according to the investors note.

Rumors of a low-cost iPhone gained traction last month following stories from The Wall Street Journal and Bloomberg claiming such a device is on the horizon.

Several analysts have also forecast a less-expensive iPhone on the agenda for sometime this year.

Strategy Analytics analyst Neil Mawston also sees an iPhone Mini in Apple's future but doesn't think it will appear until 2014, at the earliest.