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Budget iPhone would generate £4bn for Apple in 2013

The rumoured budget iPhone geared toward emerging markets could generate $6.5 billion (£4bn) in revenue for Apple this year, an analyst has reported.

In a research note, Piper Jaffray analyst Gene Munster said he believes there is a 60 to 70 per cent chance Apple will launch a lower-priced iPhone in 2013. The cheaper smartphone will likely come with a lower-quality screen and casing, and possibly a downgraded processor, he said.

Contrary to reports claiming the device will be priced under or around £100, Munster predicted that Apple will charge nearly $200, or about £125, for the off-contract phone, "given Apple's history of commanding a premium to the market." That price would be "a significant discount," considering that the cheapest Apple smartphone, the iPhone 4, currently costs over £300 off-contract, depending on the country.

If Apple introduced the low-cost device in September, it would likely account for about 30 per cent of iPhone sales during the fourth quarter of the year, Munster predicted. This would drive down the average selling price of an iPhone from $640 (£400) to around $520 (£325).

"We have the cheaper iPhone contributing about $6.5 billion in revenue in 2013 or three per cent of [Apple's] total revenue," he said.

Rumours of an entry-level iPhone began heating up this week thanks to a Digitimes report claiming Apple is planning to roll out the device in China and other emerging markets in the second half of 2013. The publication cited unnamed sources in Apple's supply chain, some of whom purport to have seen a sample of the iPhone in question. Those sources said the device will come with a larger display and sport a completely new exterior design.