Whitmore noted that of the addressable market of 1.5 billion mobile customers worldwide, two-thirds of those are pre-paid users. He sees a so-called "iPhone 4S," released alongside an anticipated fifth-generation iPhone, as a new category of device that would help Apple address that market.
If Apple were to price this "iPhone 4S" at $349, Whitmore estimates that Apple could have the product be incremental to its corporate gross margin without negatively impacting profitability.
"Apple shipped (about 87 million) units over the past 2 years which suggests it has reached only 6% penetration of its current addressable subscribers," Whitmore wrote. "Looking forward, we believe Apple has room to run both in terms of greater market penetration as well as incremental carrier additions going forward."
Whitmore sees an "iPhone 4S" that would look a lot like the low-end iPod touch. He estimates that an unlocked iPhone priced at $649 has a manufacturing margin of 70 percent, while the $229 low-end iPod touch has 38 percent margins.http://www.blogger.com/img/blank.gif
"Using this framework, we believe an 8GB iPod touch with an RF module could be priced ~$350 (unlocked without a contract) and still generate healthy manufacturing margins of ~53%," he said.
Read More: Apple Introducing mid-range contract-free $350 iPhone in Sept
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