Saturday, September 7, 2013

Will Low Cost iPhones Actually Lower Apple Margins?


The standard response by the media and traders is that a low cost iPhone and signing up of China Mobile (CHL) as a customer will send Apple (AAPL) margins cratering. Even the Options Action crew on CNBC Friday night immediately returned to the same old theory that a lower cost phone automatically means lower margins. Even if the phones create lower margins, it isn't necessarily bad if it helps garner market share for the iOS and traffic for the app store and iTunes.

Investors without kids or ones that missed what happened in the PC race in the early days probably don't realize or remember that the lack of a low cost option kept many consumers out of the crucial Apple ecosystem. Another concern should be these consumers going to the Android operating system due to the lower cost that may never return to the iOS once snarled in that platform.

Read the full article at Seeking Alpha.


Disclosure: Long AAPL. Please review the disclaimer page for more details. 



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