Does an entry level iPhone make sense?

     I’ve been thinking about the prospects of an entry level iPhone for a few days now since my source revealed that Apple is planning on introducing one. So I paid a visit to a local Verizon store to check out their current selection of low cost music phones to see what the competition is up to in this segment. Much to my surprise, Verizon, which normally has a less than stellar handset lineup, has readied a very competitive threesome for the holiday season and beyond.

     At the top of the lineup is Voyager which tries to compete with the current 8 GB iPhone with features such as large touch sensitive screen, QWERTY slide-out keypad, and internet browsing. Due to arrive in late November, Voyager will try to slow down the pace of iPhone sales. But the two models that really caught my attention are the Samsung Juke and the LG Venus. Juke is a slim looking 2 GB music phone with a 1.3 mega-pixel camera. Already out with a price just under $100 (after applicable rebates), Juke swivels to reveal the keypad and has decent navigation using a scroll wheel. But the star of the lineup, IMHO, is LG Venus. Due to arrive alongside Voyager in late November, Venus has dual screens (one with touch-sensitive and haptic feedback) and microSD memory expandable to 8 GB. Price just under $150, Venus is already getting good reviews. I should mention that Verizon also has a number of very average music handsets from likes of Nokia, Motorolla and Samsung selling for well under a hundred dollars.

     All of this brings me back to my original question. Clearly handset makers see a lucrative market for low cost music handsets with a 2-4 GB expandable or onboard memory. Sometimes market trends force manufacturers into decisions that they might otherwise not make on their own. Such was the case of the iPod adopting video capability despite repeated denials from the Apple chief himself. So let me answer a question with a question: Could Apple afford to overlook entry into this segment? Apple may not have a choice but to expand the iPhone lineup to include an entry level model to ward off competition and to carve out new revenue growth.

D.S.

Apple’s iPhone Plans Revealed

     I had a rather long chat with my Apple informant yesterday centered mainly on iPods and iPhones. I’ll be revealing more on the iPods in the coming days but as far as iPhones are concerned, I’ve been provided with 3 main pieces of insight. I have to preface this information, without revealing too much about my source, by saying that (s)he is more knowledgeable about Apple’s future plans for the iPods than the iPhones and therefore the lack of specifics here. Now onto what I’ve been able to gather from our chat:

1) Apple has set itself an internal goal of shipping 50 million units ending in ‘09. This seems to me like a lofty goal because currents expectations for units shipped in ‘07 is between 3-4 million for a single 8 GB model. This would also give Apple a market share of about 8 % for total mobile handsets shipped in North America ending in ‘09. It would make sense if Apple had more than one model to expect shipping that many units in two year’s time which brings me to the second point we talked about:

2) Apple plans to extend the iPhone lineup to 3 models. The current 8 GB unit will be the midrange model while a feature-cut model and a higher end model will also be introduced. No clue on the exact timeframe this might happen but if Apple is planning on shipping 50 million units in ‘09, it makes sense that lineup will be complete at the latest by fall 2008.

3) The lower end starter model will not be touch based. Asked about what the actual physical interface would look like, my source had no particular insight.

     I hope to have more specific information regarding the iPhones in the near future.

D.S.