Will the rumored low-cost iPhone take emerging markets by storm?

Apple is (again) rumored to have a cheap iPhone in the works, and mobile users in emerging markets are likely to benefit from this possibility.

Apple changed the smartphone industry almost overnight when it launched the iPhone in 2007. Back then, the fluid touchscreen interface and application ecosystem were revolutionary. A few years down the line, Google’s own offering, Android, has overtaken Apple in numbers mostly because of diversity. Simply put, any manufacturer could build their device, install Android, slap on their brand and profit from their venture.

Android has cemented its dominance in the emerging markets through inexpensive smartphones. At prices as low as US$50 for some lesser-known brands, just about anyone can have an Android smartphone within reach. The same could not be said about Apple’s iPhone, though. While U.S. customers can enjoy “free” units because of carrier subsidies, it’s quite different in emerging markets, such as countries in the Asia Pacific, where a good majority of users are on prepaid accounts and have to purchase handsets at cost.

Low-cost Apple “phablet”?

Enter the rumored low-cost iPhone. This device has been rumored to be in the works for more than two years now. Apple has not succumbed to calls for a cheaper model, though, and continues to offer two-generations old models as its “low-end device.” As such, even with the iPhone 5 being its new flagship model, Apple continues to offer the iPhone 4 and iPhone 4S as cheaper devices. One argument here is that Apple does not want to dilute the user experience by offering devices with severely limited specifications and altered designs.

This has been the bane of Android, after all. While top-of-the-line and flagship devices like the Samsung Galaxy S3 and Note 2 and the Google Nexus 4 all provide an excellent user experience, lower-end Android devices often come with poor functionality, clunky interfaces, slow updates and slow response times.

Rumors of the cheap iPhone have been surfacing again. DigiTimes reports that Qualcomm’s recent launch of new Snapdragon chips for entry-level to mid-range smartphones might help pave the way for Apple to come up with its cheap iPhone. DigiTimes further cites its sources, supposedly from within Apple’s supply chain and vendor network, saying that the rumored device will be a “phablet” — a cross between smartphone and tablet, in terms of size.

“Some sources claimed that they have seen the sample of the low-cost iPhone, which will come with a larger display, meeting the prevailing trend for the adoption of 5-inch displays for high-end models. They added that the low-priced iPhone will also have a brand new exterior design.”

Will Apple budge?

Apple is known for its secretive ways, and has gone through lengths to protect knowledge of its upcoming products. While the company has been staunchly keeping with its current product lines, it has been known for instances of significant divergence.

For instance, while former CEO Steve Jobs derided netbooks as severely limited, Apple launched its MacBook Air as a premium alternative, even coming up with an 11.6-inch model that could compete with any netbook in terms of size and weight (but with much more powerful specs and capabilities). Likewise, while Jobs criticized the 7-inch tablet form factor, Apple’s 7.8-inch iPad Mini has been selling like hotcakes since its launch late 2012.

And so, while the accuracy of DigiTimes’ sources can be hit-or-miss, I would say that the likelihood of Apple releasing a cheap — or at least cheaper — iPhone might not be too distant a possibility. Consider that carriers in its biggest market, the U.S., are now shifting toward pay-as-you-go schemes. Carriers are now eschewing the traditional subsidy, in which the handset cost is imputed into oft-inflated data, voice and SMS plans.

The time is probably right for Apple to launch its cheap iPhone. And when it does, I’m pretty sure that hordes of fans will go line up at Apple stores to get theirs.