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Apple working on sub-prime iPhone: insiders

Troubled iMaker focuses on smaller, cheaper handsets in grab for untapped markets

Apple’s stock has dropped 25% in under four months.
Apple’s stock has dropped 25% in under four months.

Apple is working on a smaller, cheaper iPhone for release in Q4 2013, in an attempt to soak up revenue from emerging markets, Bloomberg reported.

The move is a departure from Apple's premium-only approach as it starts to face stiffer competition from Samsung Electronics and Nokia Oyj in the high-end segment.

Last year Samsung dislodged Nokia from its position at the head of the global mobile phone sales table and enjoyed five straight quarters of record-breaking profit levels. The performance was attributed to Samsung's ability to plug market gaps quickly with a range of devices that cater to multiple preferences and price points. Last year the South Korean firm released 37 products in the smartphone category while Apple only managed the iPhone 5, which had a troubled debut.

In the 2012 smartphone market Samsung retained its 2011 top ranking, swallowing even greater share as its 2012 sales hit 28% of the market total, according to IDC figures, up from 20% in the previous year. This gave the South Korean firm a hugely widened lead on Apple, which managed a modest bump from 19% to 20% and was the driving force behind Samsung's lead in the overall mobile phone sector.

According to a source close to the sub-prime iPhone project, Apple is considering retail prices of between $99 and $149.

CEO Tim Cook has said publicly that China is a priority market. While the Asian superpower represents a huge consumer base and a growing middle class, the sales potential for high-end products is relatively small compared to Europe and the US. Analysts were underwhelmed by the iPhone 5's Chinese debut, which sold just over 2 million units during its weekend launch last month.

But with third-quarter sales in the country reaching $5.7bn, it will still prove to be a key battleground for a company that has seen its stock slide over the final quarter of 2012, from an all-time high of $705.07 in September to $525.31 in after-hours trading yesterday - a dip of 25% in under four months.