|Alleged iPhone 5C packaging|
Having made the decision to deliver a cheaper phone Apple actually have a more difficult issue to consider: how should this new phone be priced and specced?
Part of the appeal of Apple's products has been the enhanced resale value - the iPhone being a particularly good example of this. Reselling your current model iPhone prior to the release of a new model can net you as much as 75% of its purchase price. Enough to fund an upgrade to the new model when its launched.
By reducing the entry level for an iPhone 5 with a cheaper model that market for second-hand phones could be damaged, which in turn could further damage the demand for the top end model, whatever that might turn out to be.
Apple has also to consider the effect that a lower end phone will have on the sales to first time iPhone buyers. The launch of the iPad Mini prompted a collapse of the average selling price of the iPad. The cheapest model was far and away the best seller and a drop off in overall iPad sales followed in the last quarter. Was that partly driven by the drop in resale value for the full size iPad?
A cheaper iPhone, may well drive overall sales up in the short term, but the ASP and long term effects may not necessarily work in Apple's favour.
Image courtesy of Weiphone.