July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

China’s speedy growth in fast-mobile subscriptions — and increasing mobile competition among the giant Chinese mobile carriers — will be key factors in driving Apple’s moldering stock price to unseen heights of over $800, one analyst said today.

With over three quarters of net new mobile growth in emerging markets, if Apple is ever to get its stock back to the $700 heights of summer 2012, it needs a less expensive and more carrier-friendly product suite. That’s coming this summer, according to Brian White of Topeka Capital Markets, and just in time.

The three major Chinese carriers reported subscriber growth for April 2013 today, and wireless subscribers rose 13 percent year-over-year to 1.16 billion. Fast wireless subscribers using 3G connection speeds rose 84 percent to 293.1 million.

And that’s the critical number.

Source: http://www.flickr.com/photos/dailysublime/6814011513/

Competitor Samsung will have something to say about Apple’s success — or lack thereof — in China.

The major competition right now between China Mobile, China Unicom, and China Telecom will drive China Mobile, the grandaddy of mobile in the Middle Kingdom, to finally adopt the iPhone … and offer Apple’s iDevices to its 730 million mobile subscribers. That’s a deal that Apple and China Mobile have not been able to consummate since 2009, and it could be the deal that kickstarts Apple into massive growth outside its U.S. market once again. Especially given the fierce competition between carriers in China.

And the competition is all over the 293.1 million 3G subscribers, who are projected to grow to between 375 and 400 million by the end of 2013.

China Mobile’s 730 million mobile subscribers includes 120 million of the higher-end 3G subscribers, meaning China Mobile, which has historically trailed Unicom and Telecom in the more lucrative segments of the mobile market, leads the race for 3G subscribers in raw numbers. Unicom and Telecom, however — both of which sell Apple’s iPhone — have a much higher percentage of users on big contracts, giving them better per-user margins.

China Unicom has 254.6 million mobile subscribers, including 91.9 million 3G subscribers, and China Telecom has 170.2 million users and 81.1 million 3G users.

Cue the lower-priced iPhone, which White believes is coming this summer.

That will help Apple finally ink a deal with China Mobile just as the bulk of its 730 million subscribers are starting the switch to faster 3G connections. Which could mean tens of millions of new customers for Apple in Asia, and — with growth in other countries as well — set up a sales growth recovery for Cupertino that, White believes, can bring AAPL back to its $700 heights, and beyond, up to his price target of $888.

That’s a lofty target, of course, and a lot will have to change between the ears of Wall Street analysts and institutional investors for that to become a reality. Morgan Stanley, of course, has also published an analysis that Apple could triple sales in China with a lower-cost iPhone.

Since Apple sold $8.8 billion worth of product in China in the second quarter of this year, out of $43.6 billion in total sales, tripling that could be $26 billion quarterly, and perhaps as much as $100 billion annually.

Those are big numbers, and whether Apple can accomplish that or not, no one knows. But if it did, that would certainly have a major effect on Apple, its stock, and the mobile markets.

Major competitor Samsung, which sold 400 million phones last year and captures 95 percent of all profits in the Android device ecosystem, will have a few things to say about it too.

photo credit: wZa HK via photopin cc

But it looks like a new iPhone, a cheaper iPhone, a new tablet, an iWatch, or any other new products will have to wait.

“Our teams are hard at work on some amazing new hardware, software and services we can’t wait to introduce this fall and throughout 2014,” Cook said.

That’s basically as close as Apple will come to saying: no new products for you. And that is not what investors want to hear. The lack of new product introductions — not a single new product in this past quarter — is partly what hurt Apple in the stock market, as investors want to see what is new and what is coming.

When an analyst later on the call asked for more details, Cook had this to say: ”I don’t want to be more specific. We have some really great stuff coming in the fall and all across 2014.”

Image credit: Dean Takahashi

The phone is both taller and wider than Apple’s older iPhone 4, at 120mm high and 65mm wide, or 4.7″ high by 2.55″ wide. That’s both shorter and wider than Apple’s current iPhone 5, which is 4.87 inches high, and 2.31 inches wide. For comparison, the current Android smartphone sales leader, the Samsung Galaxy S III, is 5.38″ by 2.78″, and the next-generation Samsung S IV is just a shade larger at 5.51″ by 2.82″.

A cheaper iPhone has long been rumored by the analysts, even though Apple has done its best to dispel the rumors — or at least the “cheap” part of them. But Topeka Capital Markets analyst Brian White said a week ago that Apple’s cheaper phone would be announced in June and ship in July. White’s pricing analysis suggests the budget iPhone will sell for between $350 and $400.

The new rumor that Tactus has published confirms the plastic shell but shows a flat back similar to the iPhone 4 and 5, not the curved plastic back of the older iPhone 3 and 3GS. It will allegedly have a five megapixel camera, and Apple’s A5 processor, similar to the iPad mini.

And, as rumored a number of weeks ago, it looks like the budget iPhone will ship in multiple colors: black, white, blue, red, and yellow. I’m sure Apple’s names for the colors will be a little more sophisticated.

Rumors are rumors, of course, so that legendary grain of salt is certainly indicated. But where there’s enough smoke, surely there’s fire as well.

And those who have long awaited an iPhone in something other than Apple’s iconic white or black could be very, very happy.

Photo credit: Tactus

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Let’s face it, that last budget iPhone rumor hinting at a 4.5-inch screen never really made much sense.

After all, why would Apple introduce a significant upgrade in a device that’s supposed to be as inexpensive as possible?

Now KGI Securities Ming-Chi Kuo has another look at Apple’s potential budget iPhone, which falls more in line with what we’d expect, reports MacRumors. Unlike the Japan-based sources from the 4.5-inch budget iPhone rumor, Kuo has been more reliable when it comes to upcoming Apple news.

In addition to the 4-inch screen, the same as Apple’s current iPhone 5, Kuo notes that the cheap iPhone’s case will be a “super-thin plastic casing mixed with glass fiber.” The case is expected to be about half as thick as current plastic cases, between 0.4 and 0.6 millimeters.

We’ve been hearing about a cheap iPhone with a plastic case for some time now, but this is the first time glass fiber has been mentioned. It means we’ll see something completely different from the plastic cases in the iPhone 3G and 3GS.

Additionally, Kuo expects Apple to offer between four and six color options for its cheap iPhone, including the current black and white colors. This would be similar to how Apple offers different colored iPod options — it’s honestly surprising it’s taken Apple so long to offer more iPhone colors.

When it comes to the next flagship iPhone, Kuo (like everyone else in the tech world) expects a revamped iPhone 5S later this year. He also predicts that it will include a fingerprint sensor by the home button, which would replace password inputs and bring additional security to transactions through Apple’s Passbook.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

First the iPad Mini, then the iPhone Mini?

It makes some sense linguistically, but it could also make some sense financially, at least according to Morgan Stanley analyst Katy Huberty. She estimates that Apple would add $2.4 billion in iPhone revenue and triple the number of customers it would appeal to in China alone with an iPhone Mini priced at $330.

That’s in line with flagship models from Lenovo, Huawei, ZTE, and Coolpad, Huberty said, ranging from 2,000 RMB to 4,000 RMB, and that would expand the number of Chinese citizens who could afford an iPhone from 10 percent of the phone-buying public to 29 percent.

Apple has said — most recently via Tim Cook at a Goldman Sachs conference — that “we’ll never … make a crappy product.” But Apple has never said that it won’t reduce prices aggressively. In fact, that’s exactly what it did do by bringing out the iPad in place of the laptop and the iPod Shuffle in place of the iPod Touch, Cook said.

What about Apple’s well-known fat profit margins on a lower-cost iPhone?

“Even in a scenario of low 40 percent gross margin and one-third iPhone cannibalization rate, flattening legacy iPhone shipment growth, which we view as conservative, the iPhone Mini adds incremental revenue and gross profit dollars,” Huberty said.

Apple’s big problem is China is not just price. It’s that China’s biggest mobile carrier, China Mobile, has yet to cut a deal with the iPhone maker despite Cook’s recent trips to the country. China Mobile has a staggering 700 million subscribers, and while those are being whittled away by other, more nimble competitors who do offer the iPhone, 700 million potential iPhone buyers — or whatever fraction of those 700 million who can afford an iPhone — is a big chunk of customers to ignore.

Apple and China Mobile have been in on-again, off-again talks with each other since 2009, but so far the two companies have not been able to reach an agreement.

One other thought: A cheap iPhone would have greater potential than just in mainland China. Frankly, there might well be room in the U.S. and other mature markets for a lower-cost iPhone, and the rest of Asia and Africa are massive markets for new smartphones.

An iPhone Mini could help open those emerging markets for Apple as well as have immediate impact in China.

photo credit: Andrew Currie via photopin cc

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple CEO Tim Cook poured cold water on the cheap iPhone rumors today at Goldman Sachs’ Technology and Internet conference in San Francisco. Sort of.

Asked about making a cheaper iPhone to appeal to consumers in the fast-growing developing world, Cook said it was a “popular question” but redirected his answer to Apple’s focus.

“The only thing we’ll never do is make a crappy product,” he said. “That’s the only religion we have: We must do something great.”

Get all the details here: Apple CEO Tim Cook at Goldman Sachs conference

However, Cook highlighted, Apple has aggressively lowered prices on products in the past. For instance, the iPod came out at $400, but today you can buy a Shuffle for $49. Cook also said that Apple’s custom of continuing to produce older iPhones when new models come out has been an astonishing success. In the last quarter’s holiday season, for instance, the company did not have enough stock of iPhone 4s to meet demand.

And the same has been true of Apple’s core and original business, Cook said. ”We were always asked, ‘Why can’t you make a $500 Mac?’” Cook said. “What did we do? We invented iPad!”

In other words, Apple is focused on meeting needs with great products, just not always in the way that people expect, Cook said. What that means for a cheaper iPhone is hard to say, but it probably means two things:

1. Apple won’t build anything it doesn’t totally believe in
2. Apple will eventually bring out a less expensive phone, but it won’t be exactly what we expect

“Our north star is great products … we wouldn’t do anything that isn’t a great product.”

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

The twists and turns in the cheap iPhone saga are enough to give you whiplash.

Reuters this morning announced that it has withdrawn a story that said Apple marketing head Phil Schiller had dismissed the idea of a cheaper iPhone. The news organization cited “substantial changes” to the report the story was based on from the Shanghai Evening News.

Update: In a new story this afternoon, Reuters points out that the Shanghai News story was changed to remove references of cheaper smartphones. The story’s headline was changed from,  ”Apple will not push a cheaper smartphone for the sake of market share,” to “Apple wants to provide the best products, will not blindly pursue market share.” Apple confirmed with Reuters that Schiller did chat with the Chinese paper, and that it contacted the paper about making the changes.

By rescinding the story, Reuters continues to fuel the rumors that we’ll see a cheaper iPhone sometime this year.

In our coverage of the Shanghai Evening News story, our own John Koetsier noted that Schiller’s comments weren’t trustworthy. Apple may not want to build a “cheap” and flimsy iPhone, but the company may well decide to make a less expensive iPhone to increase its penetration in China.

Recent reports from the Wall Street Journal and Taiwanese news site Digitimes sparked this latest wave of cheap-iPhone speculation. Apple’s cheapest iPhone at the moment is the iPhone 4, which is free with a two-year contract in the U.S. But it’s still pretty expensive off-contract, costing $450 in the U.S., $490 in China, and $750 in Brazil, according to AppleInsider.

There’s no doubt Apple will want to drive down the cost of the iPhone for markets like Latin America and China.

Apple’s Phil Schiller has categorically denied that the Cupertino company is working on a cheap iPhone, putting to rest speculation that we covered skeptically a few days ago and the Wall Street Journal and Bloomberg also published.

As The Next Web translated, Schiller said this:

“Despite the popularity of cheap smartphones, this will never be the future of Apple’s products. In fact, although Apple’s market share of smartphones is just about 20 percent, we own the 75 percent of the profit.”

Of course, Steve Jobs — who probably taught Phil Schiller everything he knows about marketing — also said Apple would never made a 7-inch tablet. And frankly, we should wonder how truthful Schiller is being when that tired old 75-percent-of-the-profit line comes out of Apple’s back pocket, because it’s only true in a very narrow, specific, and nuanced sense, even if you’re very, very generous about your terms and conditions.

In other words, it’s kind of a lie.

Which doesn’t mean that Schiller is lying about cheap smartphones. But it could mean that while “cheap” smartphones are out — and no one who follows this company realistically thought that it would make something cheap, flimsy, or in any way substandard — significantly less expensive is not.

Point of reference: iPad Mini.

Realistically, as the original Shanghai Evening News story references (awful Chinglish from Google Translate here), Apple made 15 percent of its revenues from China and blessed little from China’s single biggest carrier, the 700-million subscriber China Mobile, which Schiller’s boss Tim Cook was visiting today. You can bet Apple wants that 15 percent to grow significantly.

And with 75 percent of new phones being activated in either Asia or Africa, an $800 handset isn’t going to do it.

A less expensive iPhone may seem crazy, but it is something that can help Apple compete in emerging markets. And it’s just what we humbly suggested in December.

Citing “supply-chain sources,” Taiwan-based Digitimes is saying that Apple “will roll out a low-cost version of the iPhone for China and other emerging markets in the second half of 2013.” Paradoxically, the new, cheaper iPhones are supposed to come with a bigger 5″ screen and a brand-new form factor. And, a new CPU: Qualcomm’s Snapdragon.

Well.

Digitimes has a fairly spotty track record on rumors, but sometimes it hits. And while Apple marketshare in mobile has never been higher in the U.S., hitting 53 percent in the pre-Christmas quarter, emerging markets — and Europe, for that matter — are an entirely different story. Android grabbed 75 percent of global market share in the third quarter of 2012, and likely had similar numbers in the fourth.

So a cheaper iPhone does indeed make sense, as I have mentioned in the past. Analysts agree, with Gene Munster calling for a sub-$200 iPhone and Ben Reitzes looking for a sub-$150 phone from Apple in a recent research note. And Patrick Moorhead of Moor Insights and Strategy told me recently that “Apple has done pretty well with its ‘one size fits all’ approach. It won’t be enough in the future to keep a commanding presence like they have today in phones.”

But a whole new form factor? And a bigger screen? That doesn’t really make sense.

I said back in December that Apple had to do something crazy to maintain its smartphone and tablet market leadership. That “something crazy” is to build an inexpensive mass-market phone, which could either be focused on emerging markets or on the low end of the North American and European smartphone market.

I sincerely doubt that this is it — particularly the big-screen part.

But something does tell me that if Apple decides to do an inexpensive — not cheap — iPhone, the company might build a completely new form factor and not simply reissue old models, as it has done to this point. Jony Ive and company like to design perfect products for specific niches, and this would be perhaps Apple’s biggest challenge yet.

But I guess I’ll believe it when I see it.

Image credit: Nak Studio

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Expectations are extremely high for Apple’s new iPhone event tomorrow, where the company will unveil its latest flagship mobile device. Apple’s new chief executive, Tim Cook, will also be under pressure to repeat the success of the company’s last CEO, Steve Jobs, who left the company in August. Janney Capital Markets analyst Bill Choi said today that he expects Apple to sell around 107 million iPhones this year.

Here’s what the VentureBeat team expects to see when Cook hops on stage tomorrow.

Senior Editor Devindra Hardawar: Something new, but also something cheap

New Apple devices never fail to stir up the rumor mill, but the run-up to Apple’s next iPhone has been the most maddening yet: It may be called the iPhone 5, or the iPhone 4S. It could be a complete redesign of the iPhone 4 — or not. For every juicy, and seemingly valid, rumor we get, there’s a report that throws cold water on our excitement.

At this point, I think Apple would be crazy not to deliver a bold new iPhone. Why else would the company delay its usual summer iPhone launch into the fall? Judging from the plethora of iPhone 5 rumors, I’m fairly certain that Apple is working on a completely redesigned model. Ultimately though, it doesn’t matter if it’s called the iPhone 5 or the iPhone 4S — it just needs to be different.

More hazy is Apple’s plans for a low-cost (and potentially free) iPhone 4 — which could be the reason for the recent spat of iPhone 4S rumors. Apple has previously made its last-generation iPhone its low-end offering (see the $50 iPhone 3GS). Now that the iPhone 4 will no longer be the high-end model, it makes sense for Apple to find ways to make it cheaper to build and sell. And such a device could be paired with Apple’s iCloud service, making it a perfect entry-level solution for many consumers.

Lead Writer Dean Takahashi: The iPhone 5 — and the kitchen sink — are en route

Apple has a wide possibility space. It could push forward on a number of expected fronts, but still surprise us with something new. The rumors this time are focused on a new high-end smartphone, the iPhone 5, with features such as Voice Assistant, based on artificial intelligence technology that Apple acquired from Siri. I expect that Apple will launch this device as the spearhead for staying ahead of Google Android devices. And the new iPhone will mean an update to the iOS software as well.

But Apple might also move into low-end smartphones with an iPhone 4S. The company might launch its iCloud music service, and it might sign up more carriers such as Sprint to carry the iPhone 5. If Apple does all of these things, then it will be clear that the company has the bandwidth to do some serious multitasking.

Lead Writer Matthew Lynley: Something completely new

There were a few reports circulating the net over the weekend that Apple would unveil an iPhone “4s” — which suggests an incremental upgrade to its smartphone lineup similar to the iPhone 3GS. That new phone would likely have a larger hard drive, a new processor (likely Apple’s A5 processor, seen in the iPad 2) and some other upgraded specifications. Apple would not have to significantly retool its manufacturing process to churn out an incremental upgrade for the iPhone. It would also give Apple the option of producing a lower-priced smartphone option with the iPhone 4, similar to what the company did with the 3GS while selling the iPhone 4.

An iPhone 4S incremental upgrade leaves the door open for Apple to completely surprise us with something new. It could be a totally new model of the iPhone (an iPhone 5-level upgrade or maybe a smaller, different form factor aimed at a different audience) or a new version of the iPad with a smaller form factor. Given the success Samsung has seen with multiple form factors in its tablets, I don’t think it would be a complete surprise to see Apple drop a 7-inch version of the iPad at its event tomorrow.

Executive Editor Dylan Tweney: An incremental upgrade is on its way

The evidence that Apple is working on an incremental upgrade to the iPhone 4, possibly called the iPhone 4S, is pretty clear. It will have incremental upgrades to the previous model: A faster, A5 processor; probably more memory; possibly a better camera. It seems it’s already being manufactured in Brazil, even. Sorry to disappoint you, Apple fans: I don’t think there’s going to be an iPhone 5 tomorrow.

The argument that Apple is working on two phones, an iPhone 5 and an entry-level iPhone 4S, is weak. The company already has an entry-level phone, after all. It’s called the iPhone 3GS, and it sells for $49 with contract. The most interesting news will have to do with iOS, which will add a voice-control feature called Assistant.

I want to believe there will be an iPhone 5 tomorrow. But I don’t think there will.

Senior Editor Heather Kelly: Look for speed and fresh iOS features

Tuesday’s iPhone event is being held at Apple’s Cupertino headquarters instead of the spacious Moscone center. It’s doubtful Apple picked the smaller location for budgetary reasons, so I’m going to speculate it’s to manage our expectations.

We can definitely expect a new iPhone on Tuesday, but I predict a beefed up iPhone 4 called the iPhone 4S instead of an iPhone 5. Hardware changes will be subtle: The phone will be faster, hold more juice, and maybe get a few more megapixels on the back camera. It will sport the Voice Assistant features we’ve heard about, Apple will trot out a few other iOS 5 features that work exclusively on the new iPhone, and it will release iOS 5 to everyone. Finally, Tim Cook will tell the audience to look under their chairs and yell, “Everyone gets a free discontinued Shuffle!!!”

Related articles

• Reality check: iPhone 4S find in iTunes says little about Apple’s iPhone 5 plans (venturebeat.com)
• The next iPhone may come in 16GB, 32GB & 64GB capacities (venturebeat.com)
• Ultimate fanboys create gorgeous, realistic iPhone 5 replica (venturebeat.com)
• T-Mobile executive says no iPhone 5 in 2011 (Updated) (venturebeat.com)
• King of Code Finalist: Ricky Robinett’s 2011 one-app-per-month marathon (venturebeat.com)