There has been little good news for Apple Inc. (NASDAQ:AAPL) investors recently. The company has gone from being the technology darling to a company everyone has doubts about. It was pretty evident that no company can maintain the growth rates and margins that Apple once boasted. However, it was not expected that the highly anticipated iPhone 5 would fall flat and sink the stock price as well.
iPhone 6?
According to recent news Apple is preparing to launch a new model of its flagship product and it might be in stores by year end. Consumers have not been impressed with the iPhone 5, and it has been almost six months since the company launched a new Phone. There is still no solid information about the new device, but the company always upgrades the processing power of its devices. A newer version of the operating system is also an integral part of its product rollouts.
Cheaper iPhone
Tim Cook has been under pressure from a number of sides due to a number of different issues, and there are doubts on his ability to replace someone like Steve Jobs. There is a lot of pressure of the tech giant to increase its dividend payout to ensure that investors got the maximum return on the huge cash hoard Apple Inc. (NASDAQ:AAPL) so jealously guards. There have also been questions raised on the small R&D budget which seems unlikely to find new products and services to fuel the high growth rates investors expect from Apple.
The investing community has been pressuring Apple to launch a cheaper version of the iPhone. European and North America markets are already mature when it comes to smartphone penetration. Smartphone manufacturers such as Nokia Corporation (ADR) (NYSE:NOK) and Samsung are relying on growth in the Asian and South American markets for future growth. While these are growing markets, they do not have high enough consumer spending to afford the expensive iPhone. That is the primary dilemma for Apple Inc. (NASDAQ:AAPL) management; either they can give up on these high growth markets or compromise on the premium iPhone brand. Recent reports in the Wall Street Journal indicate that Apple has finally decided to launch the cheaper iPhone.
A cheaper version of the iPhone might be available in the market as soon as this summer. According to WSJ, the company is already working with its Asian partners to launch the device in the second half of this year. Apple Inc. (NASDAQ:AAPL) plans to target the consumers that prefer relatively cheaper Android devices from Samsung, HTC etc. The model will be a four inch device, and the company is currently experimenting with different color shells, but it remains unclear which path will be taken. The tech giant has neither accepted nor denied this rumor, but the company is well known for surrounding its launches with mystery and secrecy.
Bottom Line
Samsung is quickly becoming the largest smartphone brand in the world and has already announced a newer model of its flagship phone, the Samsung Galaxy S3. Nokia Corporation (ADR) (NYSE:NOK) has been comprehensively beaten in the high-end smartphone arena by Apple and Samsung, but the medium to low price range is Nokia’s territory. Asian markets are Nokia’s stronghold, and the company is known for providing reliable devices at affordable prices. If Apple enters the low end smartphone market it will compete directly with Nokia and Samsung. Samsung is the fastest growing smartphone company in the world and has increased its market share from 21% in 2011 to 25% in 2012. Apple Inc. (NASDAQ:AAPL) has a history of surprising the market with its product launches and Apple investors will be hoping for a pleasant surprise.
Mohsin Saeed has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.
