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The Next iPhone: Is Apple Mulling a Double-Down?

The Next iPhone: Is Apple Mulling a Double-Down?

The Apple Rumor of the moment seems to center on the possibility that this fall Cupertino will release not one, but two new iPhone models. One might be designed to target the low-end market. A double-down on the next series of iPhones may be intriguing, but the fact remains that Apple already offers a lower-priced iPhone -- currently, that's the 3GS, which sells for a quarter of the price of an iPhone 4.

By Richard Adhikari MacNewsWorld ECT News Network
06/29/11 5:00 AM PT

This year's WWDC came and went without the appearance of a new iPhone, breaking with years of tradition. This disruption to Apple's established released cycle, combined with other factors, may be upsetting some portfolios.

"People are concerned about Apple's growth peaking, Steve Jobs' health and the delayed launch of the new iPhone," Brian Marshall, an analyst at Gleacher, told MacNewsWorld.

Nonetheless, Apple is "massively undervalued," Marshall said.

In fact, the wait may pay off with the release of not one, but two new iPhones this fall.

Apple has underperformed the sector since February largely because of concerns about the iPhone's launch, and also because of market and sector weakness, Barclays Capital said in a note to investors.

However, Apple continues to be the best growth play in the IT hardware segment, with prospect for double-digit organic revenue growth for "several more years," Barclays Capital said.

AAPL closed Tuesday at $335.26, up nearly 1 percent.

Apple News for the Week

This week saw Apple laying the groundwork for possibly even stronger growth in the future.

The company has reportedly signed up China Mobile for the iPhone, it's received clearance from the United States Federal Trade Commission to bid on high-tech patents from Nortel Networks, and it appears that the next MacBook Air is on the way to retail shelves at last.

Finally, Facebook's plans to launch an HTML 5 platform to supply iPhone users with a wide variety of Web apps instead of downloading them from the App Store may not pose as much of a threat to Apple as initially thought.

Apple did not respond to requests for comment by press time.

Ni Hao, China Mobile?

There are reports that Apple has finally signed up China Mobile, after several years of trying.

China Mobile, the largest wireless carrier in the Middle Kingdom, had more than 611 million subscribers as of the end of May.

"China Mobile will be a great new partner [for Apple] later this year," Gleacher's Marshall stated.

Locking Down the Patents

Last week, the FTC gave Apple the green light to bid on a slew of high-tech patents being put up for sale by Nortel Networks.

There are about 6,000 patents said to span key technology areas, including wireless video, WiFi Internet search and Long-Term Evolution, or LTE, marketed in the United States as a fourth-generation wireless technology.

Apple was also recently awarded a patent relating to touchscreens.

Overall, the combination of patents that Apple is putting together in its war chest may give it a significant technological lead on the competition, but that will only play out a few years down the road.

Upcoming Face-Off With Sony?

It's been widely expected for some time that Apple will introduce a new series of MacBook Airs in July -- which is only days away.

In the meantime, Sony is seeking to capitalize on the public's yearning for ultra-light notebooks. It released the Vaio Z in Europe on Tuesday.

This ultralight is said to be thinner and lighter than the MacBook Air, and it uses Intel's Thunderbolt technology, which up to now has only been available on the Apple line.

However, the device may not make much headway with dedicated Macfans.

"Nothing can compare with the MacBook Air in my view," Gleacher's Marshall said.

Two If by September?

Reports that Cupertino will release two iPhones, one of which will be targeted at the low-end market, have been circulating this past week.

Apple may intend to unveil a lower-end smartphone for the mid-range and developing nation markets. However, "you don't need to introduce a brand-new device" for that, pointed out Dmitriy Molchanov, an analyst at the Yankee Group.

Cupertino only has to cut the price of the iPhone 4 when it launches the new iPhone, Molchanov told MacNewsWorld. This would fall in line with past Apple decisions. The iPhone 3GS, which originally arrived in 2009, is now priced at $49 with a contract.

If Apple wants to enter the prepaid smartphone market, it will have to slash its bill of materials cost by $70 to $100, Tina Teng, an analyst at IHS iSuppli, told MacNewsWorld.

That's "doable if Apple put the phone function in the 8GB iPod touch," Teng suggested. "It'll be even more doable when Apple's willing to sacrifice its gross margins a bit."

Finally, Facebook's reported plans to launch an HTML 5 platform may not pose a serious threat to the iTunes App Store.

Facebook is probably "building it primarily to move their subscribers to a single Web-based platform for more control and flexibility," Marc Beccue, a senior analyst at ABI Research, told MacNewsWorld.

It's targeting iOS first "because the iOS devices have more HTML 5 features than any other device and because they have many users that are Apple customers," Beccue added.


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