Apple 'iPhone Mini' speculation reignited

Apple is expected to launch a budget version of the iPhone next year, after analysts reignited speculation about the so-called 'iPhone Mini'.

Brian J. White, a researcher at Topeka Capital Markets, said in a report this week that Apple may launch a
smaller and lower-priced iPhone to gain more penetration in the emerging markets.Mobile carriers in countries such as China and India currently do not tend to offer discounts on new smartphones linked to mobile contracts, meaning consumers therefore face a higher upfront cost.

Apple could therefore look to offer a cut-price version of the iPhone to help it attract more customers in China and India, which both have large and untapped markets for smartphones.

Launching the iPhone Mini would also help Apple gain more traction in the pre-paid, or pay-as-you-go, markets.

Neil Mawston, executive director at Strategy Analytics, said in an email interview with Reuters that his agency believes the so-called iPhone Mini will arrive next year.

"We think Apple will have to launch an 'iPhone Mini' at some point over the next three years to address the hundreds of millions of pre-paid users worldwide that cannot afford the current iPhone," he said.

"The iPhone 5 is growing fast and profitably right now, so there is little incentive for Apple to launch an 'iPhone Mini' this year.

"We expect the iPhone Mini to be more likely next year, in 2014 when... Apple will be forced to discover fresh growth streams."

An alternative strategy that Apple could take is to offer cut-price older iPhone models in countries such as China and India, although the company does not tend to prefer such a discounting strategy. Apple is locked in a fierce battle with rival Samsung Electronics over the global mobile device market, which they both dominate.

Samsung is expected to launch the new flagship Galaxy S4 smartphone in April this year, followed by the Galaxy Note 3 smartphone-tablet hybrid and a series of other phones of various incarnations over the year, according to current speculation.

The Korean firm operates a more diversified strategy with its mobile devices compared to Apple, which currently releases just one new version of the iPhone every year, with the iPhone 5S or iPhone 6 expected in the autumn.

Mawston said that he expects Samsung to "slightly extend" its lead over Apple this year because of its "larger multi-tier product portfolio".

Strategy Analytics predicts that global smartphone shipments will increase 27% this year to 875m, down from last year's incredible 41% growth as markets such as North America and Western Europe come close to saturation.

Samsung is expected to sell 290m smartphones this year, up from a projected 215m in 2012. Apple is expected to shift 180m iPhones this year, up 33% on 2012, but trailing Samsung's 35% growth.

This will mean that Samsung will have a 33% share of the 2013 smartphone market, compared with Apple's 21%, according to Strategy Analytics.