Market Overview

Apple Cannot Afford To 'Degrade Its Premium Pricing Status' With iPhone 5C (AAPL)

Related AAPL
Fast Money Picks For September 17 - Apple Inc., EOG Resources Inc And More
Arch Coal Inc, Dicks Sporting Goods Inc Highlight CNBC's Stock Pops & Drops From September 16
Claman on Call: All Eyes on the Fed (Fox Business)

Apple (NASDAQ: AAPL) may be developing a lower-cost iPhone, but that does not mean the device will be cheap.

New rumors claim that the hugely popular iPhone 4S will not be replaced when the iPhone 5S (the unconfirmed name of the next-generation iPhone) and iPhone 5C (the speculated name of the low-cost iPhone) are released.

Instead, Apple is believed to be retiring the four-inch iPhone 5 in order to continue selling the 3.5-inch iPhone 4S.

ABG Sundal Collier analyst Per Lindberg told Benzinga that the rumor "seems quite plausible."

Lindberg also said that he expects the iPhone 5C to retail for twice as much as a comparable device.

"I say twice as much as an equivalent phone, similar to the Macintosh," he said. "The Macintosh is probably twice the price of an equivalent PC in terms of the hardware components. I think Apple will probably do the same [with the iPhone 5C]."

For comparison purposes, Lindberg pointed to Nokia's (NYSE: NOK) Lumia 520, which currently retails for $100 to $120.

"I think the iPhone 5C -- or whatever they want to call it -- will probably be around 3X [that amount] -- $300 to $400," said Lindberg. "The last thing Apple can afford is to degrade its premium pricing status."

Lindberg is not the only analyst who expects Apple to maintain a high price point for its low-cost iPhone. Piper Jaffray's Gene Munster is among the analysts who expect the iPhone 5C to retail for at least $300.

At $400, the device would still be cheaper than the second- and third-tier smartphones that Apple currently produces. As of this writing, the company sells the iPhone 5 for $649 without a contract. The iPhone 4S retails for $549, while the iPhone 4 is priced at $450.

Thus, Apple can technically refer to the iPhone 5C as a "low-cost" iPhone -- so long as it charges less than $450.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Latest Ratings for AAPL

DateFirmActionFromTo
Sep 2014BarclaysMaintainsOverweight
Sep 2014Goldman SachsMaintainsBuy
Sep 2014Mizuho SecuritiesMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: ABG Sundal Collier Apple Gene MunsterAnalyst Color News Rumors Analyst Ratings Tech Best of Benzinga

 

Related Articles (AAPL + NOK)

Around the Web, We're Loving...

Partner Network

Get Benzinga's Newsletters