Eager to prime the sales pump,
may finally be bending to the economic headwinds.
The Cupertino, Calif.-based gadget maker may cut the price of the 8-gigabyte iPhone to $99, according to a growing consensus among analysts.
RBC analyst Mike Abramsky is the latest to predict that Apple could be set to create two tiers of iPhones -- a low-end model and a more expensive iPhone Pro -- in an effort to diversify its mobile phone price line up.
Apple could take advantage of the lower costs of parts and labor and cut the iPhone price in half, Abramsky writes in a note Wednesday. This lower price could help stimulate demand for the iPhone among less affluent customers.
According to Abramsky, iPhone sales could increase 30% to 40% with a cheaper price tag. The price cut could help Apple sell 5 million $99 iPhones this year, and 22 million next year, by Abramsky's estimates.
The potential price cut comes as Apple's iPhone enters its third year with the same design. In gadget land, hot designs start to
in their third year. And with
, Apple needs to wring as much sales juice as it can out of the iPhone.
Apple also faces stiff competition from smartphone rivals like
Research In Motion
, all of which have new devices coming in the next month.
On Tuesday, Morgan Stanley analyst Karen Huberty upgraded Apple to buy from hold, predicting that Apple
. Huberty wrote that she believed a iPhone price cut would be a home run on the sales front.
"We expect a price cut to the current generation iPhone to drive 50% to 100% incremental unit demand," Huberty wrote in her note. She also raised her price target for Apple to $180 from $105 previously.
Apple is expected to unveil the new iPhone or iPhones on June 8 during the company's Worldwide Developers Conference. Abramsky expects the iPhone Pro to have a faster 3G network connection, a faster processor, larger memory at 16 gigabytes or 32 gigabytes and a 3.2 megapixel camera with video. Abramsky expects three prices -- $99, $199, and $299 for the 32GB iPhone Pro.
The lower-price iPhone would fit well with
strategy to offer a $10 cheaper $59 monthly calling plan for the iPhone, as the TheStreet
earlier this month.