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Apple to sell 75 million low-cost iPhones next year

by Lance Whitney of c|net - 16 April, 2013

The much-rumored low-cost iPhone would cannibalize sales from the more expensive model but help Apple grab a healthy chunk of the low-end smartphone market.

A low-cost iPhone could see unit sales of 75 million in 2014, projects Piper Jaffray analyst Gene Munster.

In an investors note released today, Munster said he expects Apple to sell a $300 non-subsidized iPhone starting in September. Such a device is likely to trigger a 30 percent cannibalization rate, which means that for every three low-cost iPhones sold, one full-price iPhone is cannibalized.

As such, Apple's share of the high-end smartphone market may dip to 37 percent next year from 43 percent last year. But its share of the low-end (under $400) market will rise to 11 percent in 2014 from nothing in 2012.

Nearer term, Munster is eyeing flat iPhone growth for the current quarter ending in June, down from his prior forecast of a 15 percent gain. That would mean unit sales for the iPhone of around 26 million. As a result, Apple's overall revenues for the quarter are expected to reach $35.1 billion, down from Munster's previous estimate of $37.6 billion.

Wall Street in general is more optimistic, eyeing around 33 million in iPhone sales this quarter and around $39.6 billion in total revenue.

Rumors have been flying lately that Apple will unveil a low-cost, non-subsidized iPhone this year geared toward developing markets such as China. Some of those rumors have been driven by Apple analysts.

BTIG analyst Walter Piecyk expects Apple to charge $300 for the phone and launch it by year's end. Piecyk believes Apple needs such a device to boost its earnings and market share. KGI Securities' Ming-Chi Kuo thinks Apple will start rolling out the iPhone 5S and the lower-end model as soon as July.

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