Thursday, August 22, 2013

Apple Inc. has asked assembler Hon Hai Precision Industry Co. to begin shipping both a new high-end and low-end iPhone in early September


Apple Inc. has asked assembler Hon Hai Precision Industry Co. to begin shipping both a new high-end and low-end iPhone in early September, people familiar with the matter said.

The shipping plans suggest consumers could soon have access to two new iPhone models, pointing to a strategy shift as Apple attempts to regain its momentum in the smartphone market. The company hasn't previously announced different iPhone models around the same time.

Apple's suppliers in Asia started mass-producing components in June for both a standard iPhone, featuring a metal casing, and a lower-cost version, people who work at those companies said.

An Apple spokeswoman declined to comment.

The Cupertino, Calilf., company has been unveiling new iPhones in the fall since 2011. It is planning a launch event on Sept. 10, according to AllThingsD, a news outlet that, like The Wall Street Journal, is owned by News Corp. It isn't clear whether Apple would launch both iPhones the same day or initially choose to showcase just one device.

New iPhones in the past have become available about a week and a half after their unveiling.

Competitors are planning to ramp up pressure by launching new products of their own around the same time.

Samsung Electronics Co., the largest smartphone maker in the world by shipments, is planning an event on Sept. 4, during which it plans to launch a new large-screen Galaxy Note phablet—or mobile device that has functions of a phone and a tablet—and a smartwatch called Galaxy Gear, people familiar with the matter have said.

Apple has been facing tough competition from Samsung and other firms making smartphones based on Google Inc.'s Android software. A perception that Apple's pace of innovation has slowed, along with some uncharacteristic missteps by the company, helped push its shares down more than 40% in the span of six months from all-time highs of more than $700 in September. The company's shares have since rebounded to above $500.

On Monday, Apple shares closed at $507.74, up 1.1%.

In years past, Apple saw spectacular expansion, with quarterly smartphone unit shipments increasing by more than 50% from a year earlier throughout the company's fiscal 2010 and in all but one quarter in 2011 and 2012. This year, however, the company has struggled to maintain that momentum; shipments rose 7% in the quarter ended in March, though they rose 20% in the period ended in June.

Apple's struggles have led to concerns among analysts that the smartphone market may be slowing, particularly in Western markets.

Even Samsung's stock has come under pressure, hurt by concerns about sales of its high-end Galaxy S4 smartphone and an announcement in July that its operating profit would be lower than expected. HTC Corp., meanwhile, has seen profits fall dramatically and BlackBerry Ltd., once a powerhouse in the industry, has put itself up for sale.

In April, The Wall Street Journal reported that Apple was working with its manufacturing partners in Asia on a less-expensive iPhone that would likely use a nonmetal casing to differentiate itself from the aluminum casing of the high-end iPhone. The shells of both iPhone models would likely come in multiple color options, officials at suppliers said at the time.

Analysts say a low-cost iPhone could help to boost Apple's sales, particularly in emerging countries such as China and India.

The company appears to be moving to capitalize on that theory, as people familiar with the matter said component orders in the current quarter for the low-cost iPhone are much higher than those for the high-end iPhone. But they said component orders for the high-end metal-case iPhone would go up in the fourth quarter.

Some market watchers are optimistic about prospects for the lower-price iPhone.

Ming-Chi Kuo, an analyst for KGI Securities in Taiwan, estimates that more than 5.2 million units of the next-generation high-end iPhone and nearly 8.5 million low-cost iPhones will be shipped during the third quarter. But by the fourth quarter, he predicts Apple will ship 28 million high-end iPhones and 18.7 million low-cost ones. All told, the analyst estimates that total iPhone shipments will top 35 million units in the third quarter—a 30% increase over the same time last year—and rise to 55 million in the fourth quarter.

People familiar with the matter in April said the new iPhone will be the same size and have the same screen resolution as the current iPhone 5.

Write to Lorraine Luk at and Ian Sherr at


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