Apple (NASDAQ:AAPL) can tap into emerging markets and keep growing for a while to come if it were to offer a less-expensive model of the iPhone, Barclays Capital analyst Ben Reitzes said in a research note. According to the analyst, the best way for Apple to challenge the growth of Google (NASDAQ:GOOG) Android was through cheaper devices of its own. It was both a test and an opportunity for the iPhone maker, Reitzes said.
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“We believe Apple can sell a phone with a more inexpensive casing for emerging markets and a [bill of manufacturing] below $150,” the analyst wrote, according to Barron’s. “This product could be bought without a plan or be accompanied by a lower subsidy. A strategy of offering a low-end device would also not be unprecedented (remember the iPod shuffle?) and not necessarily margin dilutive like the iPad mini.”
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Reitzes noted that the Apple management’s awareness of the need to tap into the lower end of the market was evident from the launch of the iPad mini. Such products can offer the company a foothold in markets where it can capture upgrade growth, for instance, “the 40 percent of the tablet market that is owned by mostly Amazon (NASDAQ:AMZN), Samsung, Google, and ASUS.”
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