Media reports have recently highlighted the possibility of Apple launching a 4? version of the iPhone. In our opinion, there still exists demand for smaller screen phones, particularly at lower ASPs.
Readers will recall that the iPhone 5C was met with much lower demand relative to initial expectations. In our opinion, the price gap between the flagship model back then (5S) and the lower end (5C) was only $100. The flagship models today are $650-750 (even higher if memory configurations are higher). If the iPhone 6C were to price in the $450-550 range, in our opinion, Apple can stand to gain significant share. We expect the primary audience for this phone to be users in emerging markets, possibly serving as the first smartphone for feature phone upgraders and a more affordable iPhone for android switchers.
Given the lower price point, the iPhone 6C may not have all the features of the higher end 6S/6S Plus. We expect Apple will try and maintain its margin structure as with other iPhones. It remains to be seen if Apple chooses to go with a prior generation processor, such as the A8 chip, vs. the new A9 processor. Media reports indicate that the phone may not have Force Touch functionality, but may still have NFC capability as Apple would try and promote the use of Apple Pay. The phone may also be launched with a more limited set of storage options.
