Apple plans low-end iPhone, but iPad may be delayed

We are getting used to the annual spectacle of analysts falling over one another to predict what the new Apple iPhone will look like, and this year the consensus is that the vendor will go for the mass market with a lower cost version.

This would complement the new iPad, which may satisfy the cravings of high end Apple users for new functionality; and reflect the expansion of the high end handset segment, upwards to mobile internet devices such as tablets, and downwards to affordable smartphones.
However, the two-pronged attack on the mobile web market may be hindered somewhat by production delays on the iPad, which could confine its initial launch to the US. According to a client note from Canaccord Adams analyst Peter Misek, a “bottleneck” at Apple's manufacturing partners may limit iPad inventory when it first goes on sale.
In particular, Misek writes, “an unspecified production problem at the iPad's manufacturer, Hon Hai Precision, will likely limit the launch region to the US and the number of units available to roughly 300,000 in the month of March, far lower than the company's initial estimate of one million units.
“The delay in production ramp will likely impact Apple's April unit estimate of 800,000 as well. It is also possible that, given the limited number of units available in March, the launch will be delayed for a month.”
Misek still estimates that Apple will catch up and sell 1.2m iPads in fiscal year 2010 and 3.5m in 2011.
Meanwhile, another research note pushed Apple shares upwards on Friday, predicting that the annual June iPhone event would focus on a lower-cost iteration.
Morgan Stanley analysts Katy Huberty and Mathew Schneider, as reported by Dow Jones, wrote: “As we've highlighted in the past, the cost of the [iPhone] and service plan is currently the biggest barrier to incremental demand in both mature markets and emerging markets like China.”
The phone would be important to take on the rising challenge from affordable smartphones - offering huge applications stores and advanced web and multimedia interfaces for under $300 (€220) unlocked, or free with lower end data rates than previously expected for high end handsets.
In particular, the Android community is gearing up for this opportunity - for instance, T-Mobile UK has just launched Huawei's Pulse Mini, running the new Android 2.1, for just £99 (€109.28) on prepaid contract.
The new iPhone will not just be about price though - Apple, more than any other vendor, needs to avoid being sucked into a price war and must keep its many fans happy with breakthroughs in the user experience.
This year, it may focus on the voguish area of gesture control, which was much showcased by companies from Texas Instruments to NTT DoCoMo at the Mobile World Congress.
Morgan Stanley's Huberty is one observer who expects gesture recognition to turn up in the latest iPhone, an idea supported by recent patent filings by Apple. These included applications covering a touch sensitive bezel to turn the outer edges of the device into a controller for applications; and a camera-based swipe technology.
[Source: Rethink Wireless