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Is the iPod Touch becoming an iPhone? Rumors of entry level iPhone

Rumors around an ‘iPhone Lite’ and the iPod Touch going 3G are not new, but according to the latest rumors Apple might be looking at exploring the massive pre-paid mobile phone market through a lowered price entry-level iPhone.

It is Deutsche Bank analyst Chris Whitmore that in a note to investors declared that he believes Apple will be launching an entry level iPhone priced somewhere between $300 – $500 targeting the pre-paid market this fall, saying “it is time for a mid-range iPhone”.

In his note he made his case for 2/3 of the 1.5 billion global mobile market being pre-paid users, and that Apple having shipped 87 million units over the last couple of years are only at about 6% penetration of current addressable subscribers. By launching a mid-range iPhone, which he refers to as the iPhone 4S, into the market Apple should be able to both increase their penetration, marketshare, and profits.

Pre-paid vs post-paid by region of the world

In terms of the iPhone 4S, he sees it as a device a lot like the current iPod Touch, and that placing the device somewhere between the current iPhone and the iPod Touch could improve overall margins for Apple in terms of upgrading some iPod Touch owners while limiting the impact on current iPhone owners downsizing. Overall the calculations should come out in favour of a higher profit margin for Apple.

This is not the first time we hear of Apple planning a lower priced iPhone, especially following the success Android devices have had in that part of the market, building up a huge marketshare in the overall smartphone market. If Apple can deliver a device into this market that both improves their own profit margin in the short term as well as stops some of the growth Android based devices are seeing, then this could be a win-win situation for Apple.

If we were to be looking at a new mid-range iPhone that is like an iPod Touch with mobile network connection, then that would also answer some of the requests for the iPod Touch 5 from the many Apple fans out there. Hopefully there will be a large degree of flexibility in terms of pre-paid plans on offer to support even those that are primarily looking for data usage instead of voice minutes.

We will keep following the developments around this rumor so please check back for updates.

[source: Appleinsider]

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Filed in: iPhone, iPod Touch

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