Huberty also added in her note that Apple was likely to release a lower-priced iPhone to maintain growth in the coming quarters. High demand for the iPhone 4, which is the cheapest smartphone in Apple’s lineup at the moment, in the December quarter was surprising, but it also indicated the need for a low-cost handset from the company.
With a gross margin of 40 percent and a one-third cannibalization rate, the “iPhone mini” would drive incremental revenue and gross profit, Huberty wrote.
“The company’s approach to product decisions and innovation has not changed in the past several years despite the CEO transition,” Huberty wrote, signaling at Tim Cook’s takeover from late co-founder Steve Jobs in 2011. “Making great products remains Apple’s core strategy and the company is as confident as ever about the future pipeline of new products and services.”
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