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New low-end iPhone expected to cost half as much as iPhone 5, margins seen at 38%

Low-cost iPhone Margins

Apple (AAPL) is expected to switch things up this year and launch not one but two new iPhone models. Industry watchers believe one will be an incremental update to the current iPhone 5, dubbed “iPhone 5S,” that will feature the same design with an updated camera and processor. The second will reportedly be a brand new low-end iPhone that may help Apple gain share in emerging markets. Regarding the latter, Credit Suisse analysts said in a recent research note picked up by ValueWalk that the new cheaper iPhone will likely achieve an average selling price of $329. Apple’s current iPhone 5 starts at $649, so it’s understandable that investors are concerned over crunched margins. According to Credit Suisse’s analysis, however, Apple should be able to pull off 38% gross margins with the entry-level iPhone, suggesting the new handset might not be as much of a burden on Apple’s sliding margins as anticipated.

Zach Epstein

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.