With its share of the smartphone market slipping, Apple reportedly plans to launch a lower-cost iPhone next spring.
The new model would be Apple's first low-cost smartphone since the launch of the iPhone SE in 2016, which started at $399.
The decision to revive the lower cost model comes amid a rough patch for the iPhone. Apple reported its first-ever decline in iPhone shipments for last year, and this summer it lost the title of No. 2 smartphone maker to Huawei. The U.S. company also has suffered two straight quarters of shipment and market share drops this year, according to IDC data. The global smartphone industry overall also faces its third consecutive annual decline in 2019, according to IDC projections.
The iPhone slump lies could be the result of the intensifying Washington-Beijing trade war that has weighed on consumer sentiment in China, but also
rests on Apple's pricing strategy, which saw the iPhone XS Max retail for as much as $1,099 when it was launched.
The cheaper iPhone is designed to help Apple gain ground in emerging markets, where consumers are more price sensitive. It could also counter mid-to-high range smartphone models from Samsung Electronics, Huawei and Oppo -- as well as challenge Google, which became the No. 5 smartphone maker in the U.S. during the June quarter thanks to its $399 Pixel 3A.
The new, cheaper iPhone could boost sales for Apple next spring, when the life-cycle of new flagship iPhones -- scheduled to be unveiled Sept. 10 -- would naturally begin to slow.
Apple ramped up mass production of the latest flagship iPhones in the final two weeks of August, and the manufacturing process was smooth since there were few challenging new features this year, according to sources quoted by Nikkei Review.
However, the initial production run of this year’s new iPhones is around 10% less than the 80-85 million units during the same period in 2018 -- a conservative approach that reflects the uncertain global economic outlook.
The size of the new model is expected to be similar to the 4.7-inch iPhone 8 that was introduced in 2017. The model will share most of the same components with the flagship iPhones this year, and it will feature the lower-cost liquid crystal display that will help Apple achieve the lower starting price-tag, although the final pricing for the model is not yet settled.
Apple plans to unveil at least two flagship iPhones next year featuring premium, organic light-emitting diode (OLED) displays. It is even considering releasing all three of next year's models with OLED if China’s leading display maker, BOE Technology, passes the U.S. company’s certification to supply the screens.
The cheaper iPhone next spring could be Apple’s only new handset that still uses LCD displays. The financially-troubled Japan Display would be its major supplier, while LG Display will also provide LCD for this model.
Apple is also lagging behind some competitors in launching a 5G phone.