Apple is working on a smaller, cheaper smartphone in order to fend off the threat from Android, according to a report in Bloomberg.

"It makes sense for Apple because its iPhones are premier products, but the bulk of the market purchases basic phones and feature phones," Harry Wang, a director at Parks Associates, told MacNewsWorld.

"The premium brands like Apple are looking at how to increase sales volume and are looking at the mid-range segment of the smartphone market," Parks Associates' Wang suggested.

"These consumers are looking for a good brand but not one as high-end as the iPhone," Wang added.
"Apple's differentiation from other smartphone brands is the software, which is pretty unique and user-friendly," Parks Associates' Wang pointed out.

Apple will probably massage the hardware in order to offer a cheaper smartphone, Wang opined.

"LG has launched a basic smartphone -- the LG Optimus -- and that's a pretty smart move to capture the mid-range to lower-end market," he pointed out. "That's had pretty good sell-through numbers."

"Maybe they'll use a two-megapixel camera instead of a five-megapixel camera, or they'll use a camera that doesn't support HD video, or they'll use a screen that's less expensive or offers lower resolution," Wang said. "But remember, over the last few years, Apple has been able to significantly reduce costs because of its order volume, so it can launch a mid-range smartphone without sacrificing too many features."
Cupertino needs to move quickly, Parks Associates' Wang stated.

"If Apple doesn't eat its own lunch, somebody else will," Wang said.

From the article, "Rumor: iPhone Has a Wee One on the Way" by Richard Adhikari

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