Almost a year after releasing the iPhone 5, Apple is expected to release two new iPhone models at a September 10 press event – a (possibly gold-colored) successor to the high-end iPhone 5, likely to be called the iPhone 5S, and a budget iPhone with a plastic casing that has been dubbed the iPhone 5C. This more affordable version of the iconic iPhone may become a catalyst for boosting Apple’s market share in China. It could also propel Apple’s stock price and line the coffers of company investors.
Earlier this week, Morgan Stanley analyst Katy Huberty shared the results of a Chinese consumer survey with bank clients. Huberty’s team polled Chinese mobile phone owners about their interest in purchasing a new iPhone and how much they would be willing to pay. The results indicated that with a cheaper version of the iPhone, Apple could become China’s leader in smartphone market share.
“iPhone 5C could increase Apple market share by 13 points in China, with the largest share losses at Samsung, HTC, and Nokia, according to our July AlphaWise survey of 2,000 Chinese handset users in tier 1-2 cities. While a formal China Mobile relationship is less certain, it could add another 6 points of share, allowing Apple to take the smartphone share lead,” said Huberty’s note to investors.
The note continued: “Surprisingly, iPhone 5C pricing sweet spot of $486 (ex-tariffs) is higher than our assumed $399. Based on our bill of material estimates, iPhone 5C is accretive to our gross margin assumptions above $393.”
Huberty also asserted that Apple has experienced the largest jump in repurchase rate among major handset vendors. Android-powered phones by Samsung and others could be forced to reconsider pricing in order to compete with an iPhone 5C.
Yesterday, market research firm UBS stated that Apple’s stock price could soar by more than 10 percent following the release of the iPhone 5C. UBS has also raised Apple’s stock price target from $500 per share to $560, with earnings per share at roughly $44.65 for 2014. That figure could rise to $48.45 for fiscal year 2015.
“The iPhone 5C is expected to be the main driver for Apple stock becoming more bullish, as the analysts believe the cheaper iPhone will be a game-changing device in the Chinese smartphone space,” reported US Daily Voice. “China Mobile, which is the world’s largest carrier in terms of subscriber base, could sell about 17 million additional iPhones if the deal is successful, 70 percent of which may be iPhone 5C units.”
The positive outlook for Apple’s iPhone 5C comes at the same time as new leaked images emerge. GSM Arena posted an alleged press photo of a white iPhone 5C alongside shots of a purported dummy model that could be used in store displays.