Analyst: A Cheaper iPhone Will Be Apple’s Winner

The size of the low-end market will make up for the lowered margin of a cheaper iPhone, according to Piper Jaffray analyst Gene Munster, who predicts the launch of such a device would be the catalyst Apple’s (NASDAQ:AAPL) shares need. Munster writes in a note to clients that the rumored low-cost iPhone, which he estimates to arrive in the September quarter, will accelerate Apple’s gross profit growth given the approximately $135 billion market for it this year.

“We believe Apple could sell 27 million total units in a partial year in this calendar year, 96 million units in calendar year 2014, and 170 million units in calendar year 2015,” Munster writes.

The analyst also stresses the need for such a device, calculating that the lowest-priced phone from Apple, the iPhone 4, is 133 percent more expensive than the average low-end smartphone. He believes Apple will price the unlocked phone between $199 and $249 to better compete with the average low-end smartphone price of $238 in the six international markets he analyzed.