Apple Supplier Building Cheaper iPhones

What did Reuters report?

Asian suppliers to Apple had begun manufacturing a lower-priced version of the iPhone 4 with a smaller 8-gigabyte flash drive, according to two people with knowledge of the matter cited by Reuters in August 2011. The flash drive for the 8GB model was being manufactured by a Korean company, one source said, declining to name it; Apple sourced its flash drives from Japan's Toshiba and South Korea's Samsung Electronics at the time. Both sources declined to be identified because the information was not yet public. Apple and Samsung both declined to comment, per Apple's legendary secrecy with suppliers.

Why an 8GB iPhone 4?

The iPhone 4 had launched in June 2010 in 16GB and 32GB versions, with a white model added in April 2011. An 8GB variant, expected within weeks of the report, would give Apple a cheaper entry point — and analysts said it could help the company push into emerging markets, where upfront device prices matter far more than they do in subsidy-driven Western markets.

What happened next?

The report proved accurate. When Apple unveiled the iPhone 4S in October 2011, the 8GB iPhone 4 became the new entry-level model — $99 on contract in the US, and eventually free. The cheaper iPhone 4 went on to become a workhorse in price-sensitive markets, including India, where it stayed in the lineup for years. The rumor-mill lesson held too: supply-chain leaks, anonymously sourced, were the most reliable window into Apple's plans that existed.