EApple, Citigroup, Glen Yeung and iPhone mentioned in Analyst: Cheaper Phones Are a Curse on Apple
Will the introduction of low-cost mobile device alternatives into Apple’s (NASDAQ:AAPL) product line hurt, rather than help, its bottom line? Ever since rumors emerged about the possible introduction of a low-cost iPhone, analysts have been trying to predict the impact that this device would have on Apple’s profit margins.
Citigroup (NYSE:C) analyst Glen Yeung believes that the introduction of a cheaper version of the iPhone will help drag Apple’s gross margins down later this year. Yeung also believes that Apple may introduce a cheaper iPad model to counter the falling sales of the iPad mini. However, he also believes that the overall mobile device market is inevitably trending towards cheaper devices.
Yeung bases some of his iPhone market predictions on a previous analysis done by his coworker Kevin Chang. Chang’s work concluded that “we continue to see weak demand for iPhone 5 but surprising demand sustainability for iPhone 4/4S,” reports Barron’s. Chang believes that the sustained popularity of the older iPhone models is due to Apple’s perceived lack of innovation in the iPhone 5. For this reason, he predicts that Apple will produce 10 million units of the iPhone 4 and iPhone 4S along with 18 million iPhone 5 units this quarter.
