And although the phone has exploded in popularity in each of its subsequent five installments, it now looks like Apple might be thinking smaller.
While the U.S. is iPhone-crazy, the company is having more issues overseas. In the third quarter of 2012, the company held less than 15% of worldwide smartphone shipments, while Google (NASDAQ:GOOG) and Samsung (PINK:SSNLF) continue to gain market share.
Overseas, one of the biggest barriers is price. In the U.S., subsidies from wireless carriers like AT&T (NYSE:T) and Verizon (NYSE:VZ) put the ticket price of the iPhone 5 at $199. The iPhone 4S, on the other hand, goes for $100 less, while the iPhone 4 is actually free with a two-year contract. Without a contract, though, the product’s price is a bit less appealing: $649.
It’s worse in emerging markets, where iPhones usually cost more than $700 per unit.
But now there is talk that Apple might debut a smaller, cheaper version of its popular product in an attempt to gain ground in developing nations. In fact, the company reportedly has been working on a more affordable iPhone for nearly two years and such a device could be debuted later this year, according to The Wall Street Journal.
The phone would available in the U.S. as well; reports say Apple has spoken to at least one of the top U.S. wireless carriers about its product plans. The phone is expected to go for a retail price between $100 and $150. Possible changes for the cheaper version could include a plastic shell instead of aluminum and the use of recycled parts.
As WSJ notes, the move would be a huge strategy shift for the company. In the past, Apple has “prided itself on prioritizing profits over scale and offered a relatively small number of products mostly targeted at the high end.”
The aforementioned iPhone 5 has a retail price of $649 but reportedly costs around $215 to build, according to a recent Barclays BOM report. That excludes the value of warranty, manufacturing costs and logistics expenses, of course, but still leaves room for hefty margins.
“A less-expensive iPhone risks crimping the company’s profit margins,” the WSJ added. At the same time, it could also bring in new cost-conscious customers.”
As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.