Cheaper iPhone may be in pipeline

Fake iPhones in Shanghai
Image caption Desire for Apple products in China has created a booming fake industry including the iPhone 5

Apple may be about to launch a cheaper version of its iPhone 4 as it seeks to compete with Nokia and Microsoft in markets such as China.

According to the Reuters news agency, Apple is in talks with Chinese mobile operators and the handset could be launched within weeks.

To date Apple has targeted the premium end of the mobile phone market.

However, some industry watchers are sceptical about claims of an "emerging markets" version.

"It is more likely that Apple will price down its existing model when it releases its next flagship product," said Ben Wood, an analyst with CCS Insight.

The lower specification model would, according to Reuters, feature 8GB of internal storage, as opposed to 16GB or 32GB on the current iPhone 4.

Next generation

Apple is widely expected to launch the iPhone 5 this autumn. Speculation about its design and features is driving frantic discussion on blogs and news sites such as

Among the theories gaining traction is the introduction of a bigger touchscreen, redesigned antenna and an 8-megapixel camera.

Mr Wood believes that the idea of targeting different models at different markets made some sense.

"No-one questions Apple's total dominance of the high-end of the market and it is a logical next step to push down the price and grab another slice of the mobile phone market," he said.

But managing both a premium and cheaper product will be a "delicate balancing act", he thinks.

"Apple has so far maintained an eye-watering margin that rivals can only drool over. People are prepared to stretch their budgets to get their hands on an iPhone so it will have to ensure that its premium product is good enough," he said.

According to Gartner, smartphones are gaining in popularity, accounting for 25% of overall mobile sales in the second quarter of 2011.

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