Morgan Stanley had a very good note out earlier today reporting that Apple needs to issue an iPhone mini to capture share in China. This is what I have been advising as the market share margin trade-off is favourable for Apple’s bottom line. Morgan Stanley estimates that a cheaper emerging market-oriented iPhone for the Chinese market would cut Apple’s margins down to 49% from 51% while the new handset would boost the pre-tax bottom line by $2.4 billion and triple Apple’s market share in China.
Last week, in my post on the mobile market, I wrote “what declining handset sales mean for the mobile industry“. And this is declining emphasis on mobile adoption and increased focus on handset upgrades, a shift that will lower handset average selling price. This should put increased emphasis on emerging markets for growth as mobile manufacturers can take better advantage there of handset upgrades to smartphones. Apple needs to get into this market as Android is already tapping $50 smartphone market in a big way and every price point in between.
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