A forecast envisions Apple unveiling a cut-price smartphone within the next two years to stem competition from Android in Asia and Africa.
According to a note to investors from Apple analyst Gene Munster, Apple plans to build a sub-$200 handset to build its market share in India
and China where network carriers are not prepared to subsidize handset costs in order to tie potential customers into long-term contracts.
The latest smartphone sales figures from Gartner show that Android currently accounts for over 70 percent of the world smartphone market while Apple has less than a 15 percent share.
Meanwhile, data from Canalys shows that the Asia-Pacific region accounted for 53 percent of worldwide smartphone sales in the third quarter of 2012 and that in China alone, local manufacturers, using older forms of the Android operating system on their handsets, are quickly catching up with Samsung, currently the most popular manufacturer in the region.
All of Apple's devices sell at a premium and so it cannot and will not compete in terms of price with its competitors, only in terms of quality. This approach to business leads many in the industry to assume that a low-cost phone from the brand would not simply be an older or discounted iPhone, but a handset developed and designed specifically for the territories in which it would be sold.
This is not the first time that low-cost iPhone rumors have gathered pace. Two years ago as excitement gathered about the iPhone 4's potential features, many analysts suggested that Apple also planned to launch a low-cost handset aimed at the two-thirds of the world's population that use mobile phones without a cellular contract.