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RBC Analyst Claims $99 Entry-Level iPhone Coming (Again)

An analyst by the name of Mike Abramsky who works for the Royal Bank of Canada (RBC) claims that Apple is working on an entry-level iPhone that will be priced at $99, and start selling sometime this summer.

Abramsky’s report cites “checks” as his sources for the information. What stands out is that Abramsky is expecting a slimmed down version of the iPhone with less features and certain connectivity abilities left out. He expects the $99 iPhone to come with 8GB of storage, and the 16GB and 32GB iPhones to fetch around $199 and $299, after a hefty $400 subsidy.

The chart below shows Abramsky’s expectations from Apple come June/July 2009.


• The main cost reductions would come from fewer features — not a crappy ‘iPhone nano’ or something without a multi-touch screen. Abramsky thinks it might have a lower-resolution camera, no 3G Internet access or GPS, and a cheaper data plan (~$15/month) with a usage cap. We agree that lowering the monthly bill would help drive iPhone sales, but carriers won’t be thrilled.
• Meanwhile, the iPhone 3G will get feature upgrades, such as a better camera, video capabilities. (See chart below.)
• He thinks Apple could sell 20-30 million of these cheaper iPhones in fiscal 2010, boosting Apple’s smartphone market share to almost 20%.
• Cheaper iPhone will eat into iPhone 3G and iPod sales. And a lower subsidy and lower margins means Apple will have to sell three times as many to make the same gross profit from one iPhone 3G. He expects fiscal 2010 iPhone gross margins to shrink to 35%-37% from 50%+.

As 9to5mac notes, we already know that Apple COO Tim Cook has completely disregarded a cheap iPhone as something Apple is working on. Cook has explained that Apple isn’t hear to make “the cheapest phone around,” they’re hear to make “the best phone.” The mere thought of an iPhone nano makes us cringe, and aside from analysts over-analyzing the iPhone’s future, we think its pretty cut and dry. But who really knows how analysts analyze things to get their analysis?

Comments [5]

5 Comments to “RBC Analyst Claims $99 Entry-Level iPhone Coming (Again)”

scott @ February 10th, 2009 at 9:54 am
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I cant decide whether to purchase an iphone next week, or wait until the summer.
Anyone have a suggestion?? I would really appreciate it.


Aviv @ February 10th, 2009 at 9:55 am
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Scott: The summer’s a long time from now, and that’s if all of this pure speculation ends up true. I’d go ahead and purchase one now if you can afford it.


scott @ February 10th, 2009 at 12:59 pm
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Aviv, thanks- i think that i am leaning towards purchasing one because i have been waiting so long. my current contract ends in the summer, so i will be ending it early, which is no big deal ( paying less than $90), and i have gift cards to the apple store to cover the cost of the phone… crazy.


tone @ February 10th, 2009 at 11:28 pm
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Dude if you can wait it out, wait it out. It’s already February. I am waiting it out and my contract will be expired by then and plans are sure to change, hopefully for the better. you know they are upgrading the phone and AT&T is going to subsidize it to at least 199 again. So yeah wait unless you actually really need to get a new iphone. if you haven’t bought yet i understand the itchy trigger finger, but if you do, just remember “IT’S THE SAME SOFTWARE”. that’s how i am going to get through this.


Khgs @ September 12th, 2014 at 7:15 am
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Its a tricky one cause the price could keep going up from here. Some optinos are:1. Take half a position here at 5.50 and then another if it sells off to the lows of the day to get an average price near the 5.0 mark.2. Take the full position now at 5.50 for 1.8x bagger.3. Wait for $5 print again.Waiting for the $5 seems a little risky small chance you don’t see it again. Andy has pointed out a few times about upside and downside risk. If you are asking what is the highest price you are willing to enter, then you might as well go in now and grab a 1.8x bagger. At the end, it is all up to your risk profile. If you really want a 2x bagger, then another spread one strike up might be better.