With the discontinuation of the iPhone 3GS, Apple could hamper its ability to gain a significant share in developing smartphone markets. Charlie Wolf of investment banking firm Needham & Company said in a note to investors on Monday that he believes Apple should introduce an inexpensive iPhone model for developing markets. He also believes that it wont happen any time soon.
In prepaid markets like China price is king. By keeping the iPhone 3GS available at a lower price, Wolf believes Apple could have addressed the issue. In predominantly prepaid markets, unlocked phones can start as low as $150. Under a prepaid plan, the unsubsidized price of the iPhone 4 is $450. Wolf believes it will be difficult for Apple to gain traction at that price point (via Apple Insider).
China surpassed the US earlier this year as the largest smratphone market in the world. It and other developing markets are predominantly prepaid and Apple is going to have to adapt if it wants to grow in those regions.
Carrier penetration is another way for Apple to increase their market share. They currently have their eye on making a deal with China Mobile, the largest carrier in the world with 688 million subscribers. Apple is having trouble because their proprietary 3G network is not compatible with the iPhone. However, the new 4G LTE network China Mobile is constructing should be compatible with the 4G standard, which should smooth things out.