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

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Low-cost iPhone MarginsApple (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.

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