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Let me address……
During FQ2/2013 Apple sold 37,430,000 iPhones with an ASP of $613. ASP has been in slow decline for quite sometime, so assuming an ASP of $600 for FQ3/2013 should not be unreasonable. iPhone has been generating 50+% Gross Margins for a very long time. At 50% iPhone generated US$11,477,500,000 in Gross Margin during FQ2/2013.
Now, let's look at what Apple would have to do to match those Gross Margin $s, assuming lower ASPs. Let's also assume that Apple successfully reduced average COGS by 15% ($255 vs $300).
If Apple could do that, then I'd have ask why they haven't.A reduction in ASP to US$500 would require a 25% increase in unit sales volume to beak even with current Gross Margin dollars, and accomplish nothing more than achieving greater market share.
Stated another way, Apple would have to sell an additional 9,357,000 units just to break even on current Gross Margin. Does anybody really think WS will look more favorably on AAPL, if Apple has to sell 25% more units just to break even?
MARKET SHARE, especially the share you are buying, is not the holy grail, MARKET SHARE with profits is, just ask the market share leader (Samsung) that makes about half as much profit as Apple for each handset produced, and whose underbelly is under attack by manufacturers selling for even less.
One must also keep in mind that Samsung handsets are offered by nearly twice as many carriers as is Apple's iPhone.
If Apple was concerned about market share over gross margins, it wouldn't have to produce a lower cost iPhone, all it would have to do is sign more carriers. Gee, they haven't, what does that tell you?
There isn't going to be a specific lower cost iPhone. This does not mean that Apple won't lower ASP. That's a different issue. Still, I do not see Apple doing that either. Apple's DNA is to raise the value proposition to protect the top line.
iOS 7Apple products get better, not cheaper.