Can Apple Get This Drastic With New iPhone Prices?

Apple (NASDAQ:AAPL) could start offering an unsubsidized iPhone for $200 by next year, sparking a big surge for the company is emerging markets where it competes with cheaper Google (NASDAQ:GOOG) Android-based handsets. According to Piper Jaffray analyst Gene Munster, Apple is likely to cut the price of an existing iPhone model to about $200 by September of next year, down from the current $375 for the 8-gigabyte iPhone 3GS.

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Such a contract-free, cheap handset will help Apple in emerging markets and could increase the company’s global smartphone share from 20 percent this year to 32 percent in 2015, Munster writes. The analyst adds that the cheaper handset could account for a quarter of all iPhone sales and eventually result in trimming the smartphone’s average selling price. The iPhone has maintained an average of $641 since the launch of the iPhone 3G in June 2008, but is projected to fall to $434 by the end of 2015.

It would also help Apple raise its gross margins on the smartphone, which are currently between 49 percent and 58 percent, and bring them closer to the between 23 percent and 32 percent mark of the iPad.

“We believe it is becoming increasingly possible for Apple to build the low end iPhone for $130-150, which would suggest a 25-35 percent gross margin,” Munster writes. “While some investors may not like the margin dilution from a cheaper iPhone, we believe that view misses the bigger market share picture.”

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