With cheaper iPhone, Apple to break out iPod segmentation model

Apple seems to be planning to model its iPhone sales model after what it did with the iPod. That move could be a boon for emerging market growth.
Written by Larry Dignan, Contributor

Apple is reportedly looking at launching inexpensive iPhone models in various colors to hit emerging markets as well has smartphones with larger screens.

According to Reuters, Apple is exploring colors and screen sizes to diversify its iPhone line-up. Analysts note that Apple will pursue a "good/better/best" segmentation for its iPhone lineup.

The new iPhone market segmentation strategy will look familiar.

Sound familiar? It should. Apple seems to be planning to model its iPhone sales model after what it did with the iPod. Low-end devices like the Shuffle pave the way for a mid-range device such as the nano and ultimately get you to an iPod touch. The iPad with the addition of the mini is getting a similar set-up.

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Reuters' report, like previous ones highlighting a cheap iPhone play, note that product plans for Apple may change. For instance, Apple may look at a 4.7-inch screen iPhone and a 5.7-inch screen. Apple may want to take a wait-and-see approach with the large screen sizes. Anecdotally, I've heard at least a dozen people buy the Samsung Galaxy S4 and note that the screen is too big. Samsung's Galaxy Mini may offset those concerns.

What's unclear about Apple's plan is how it will affect profit margins. Cheap and colorful iPhones will inevitably cannibalize sales on the higher-end version. Apple could make up the difference on volume, but maybe not. Regardless, Apple needs an inexpensive phone to compete in emerging markets like China and India.

At AllThingsD's D11 conference, Apple CEO Tim Cook acknowledged that the iPhone hasn't replicated the iPod market segmentation model "yet."

What's unclear is whether Apple's low-cost iPhone will land in 2013 or hit in 2014.

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