According to a January 8 report in the Wall Street Journal, Apple has decided to build a lower-end iPhone to increase the iPhone's market share. Over the past 9 months, the iPhone's share of the smartphone market has dipped from a high of 23 percent to about 15 percent. Samsung's market share has jumped from 9 percent to 31 percent over the same period.
As this report points out, the iPhone is the bestselling smartphone in the United States. You can get a new iPhone 5 for just $199 with a two-year contract and earlier models for only $99 or even free.
However, in emerging markets where carriers don't offer subsidies to reduce the cost of an iPhone (like they do here), it can cost upwards of $649. A Google Nexus phone can cost as little as $300 without a contract. This puts the iPhone at a big disadvantage with overseas customers.
Apple's strategy before was to offer previous iPhone models as lower prices and, while that strategy has worked in the United States, it is less effective overseas. So executives have apparently decided to move to manufacture a cheaper phone.
What would this new iPhone look like?
This cheaper iPhone would probably use a polycarbonate plastic case rather than the aluminum shell the iPhone 5 uses. It would however use many of the same internal parts.
This would be the first time that Apple has moved to offer different versions of the iPhone, but Samsung has proven with its multiple versions of the Galaxy, that this can be a winning strategy. There are other reasons too that Apple must move to multiple versions of the iPhone which we talk about in Report: New iPhone being tested with iOS 7 for likely June announcement.