Potential iPhone carriers can't meet Apple's demands, subsidise phone sufficiently

Apple needs to make a low cost iPhone for the sake of the carriers, analyst

It's not the potential customers in emerging markets that need a low-cost iPhone so much as the carriers who are refusing to sell the iPhone as they cannot meet Apple's demands and cannot subsidize it sufficiently to be able to sell it in those markets.

Horace Dediu of Asymco noted Apple's prohibitive carrier requirements in an interview with Bloomberg. He said that the networks balk at the conditions imposed by Apple which makes the iPhone less attractive.

As a result, 2.8 billion customers are prevented from having access to the iPhone.

Many of the carriers that cannot afford to work with Apple are based in China, Japan, India an Russia, where the market for such devices is growing. Dediu singles out China Mobile, the world's biggest phone company, and NTT DoCoMo, Japan's largest mobile carrier, as providers that have not agreed to carry the iPhone.

According to Dediu, Apple has deals with about 240 carriers. In comparison, Samsung has agreements in place with 800 carriers, according to Dediu.

"The narrative has been focused on the consumer demand, and the narrative needs to shift to the operator," Dediu claims, adding: "Apple has run out of the kinds of operators that will say yes to them."

BTIG analyst Walter Piecyk echoes the point, telling Bloomberg: "The carriers that haven't gotten the iPhone are in markets that need a lower-priced phone. A $600 phone doesn't cut it for 80 percent of the wireless market that is prepaid - you're talking about people with monthly bills of $10 to $11."

Strategy Analytics' Neil Shah agrees: "Carriers are starting to question Apple's pricing strategy and are supporting multiple other platforms. They no longer need Apple," he told Bloomberg.

Apple may be preparing to launch a low-cost iPhone this year. ETrade Supply and DigiTimes sources claim that Apple is going to launch a low-cost iPhone this year, and analysts at JP Morgan think it will cost $350-400 (£226-£259).

Follow Karen Haslam on Twitter / Follow MacworldUK on Twitter

Related:

Budget iPhone mini to cost £226, will launch this year, reports

Why you shouldn't listen to well-paid analysts

Allegedly leaked photos, price and launch date of Apple's budget iPhone emerge

Low-cost iPhone mini release date, rumours and leaked images

Should Apple make a low-cost iPhone, ponders ex Apple exec Gassee

Does Apple really need to make a cheaper iPhone for China and India?

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Tags iPadsmartphonestabletsAppleiPhonehardware systemsconsumer electronicschina mobileBTNTT DoCoMoBloombergAsymco

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Karen Haslam

Macworld U.K.
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