Cheap iPhone Could Boost Data Rewards, Issues

The popularity of the iPhone 5 and other devices has already pushed Apple to beef up its backend infrastructure.

A new report about working conditions at a Chinese plant run by Apple manufacturing partner Pegatron seems to indicate that a low-cost iPhone with a plastic backing is indeed in the works.

Nonprofit watchdog organization China Labor Watch produced the report (PDF), which makes a handful of references to a plastic iPhone reportedly in development. “Its assembled products include iPhone 4, iPhone 4S, iPhone 5, and low-priced plastic iPhones” is how it summarizes Pegatron’s production in one early section (pp. 13, to be exact).

And at another, later point: “Today’s work is to paste protective film on the iPhone’s plastic back cover to prevent it from being scratched on assembly lines. This iPhone model with a plastic cover will soon be released on the market by Apple.”

For months, scuttlebutt has abounded that Apple is hard at work on a “cheap” iPhone with a plastic shell. Earlier in July, Apple-centric blog MacRumors posted some hypothetical mockups of those lower-cost iPhones, which could come in bright colors and feature the company’s flagship iOS 7. An inexpensive device would certainly help Apple further penetrate emerging markets such as China. (While Apple offers the older iPhone 4S and the iPhone 4 for free or cheap with a two-year contract in the U.S., such deals may not be available in other countries.)

Apple faces increased competition from Lenovo, LG Electronics, ZTE, and other small manufacturers that all want a larger piece of the smartphone market. That rivalry could drive Apple into figuring out ways to expand its market presence, particularly in the midmarket tier currently dominated by Google Android devices. “While Samsung and Apple accounted for significant share of the overall market, they were not the only vendors active in the high end of the market,” Ramon Llamas, an analyst with IDC, wrote in a recent research note, “and recent device introductions and upcoming launches signal more vendors targeting this space.”

If a cheap iPhone hits the market, and if it sells well, it could further pressure Apple’s cloud infrastructure, which already needs to handle a tsunami of transactions and stored files. It could also generate (via apps) a ton of data for developers, marketers, and others to run through their respective Big Data applications. With more smartphones out there, more opportunities abound—but so do the challenges.


Image: Apple