Apple to Sell Cheaper IPhone 4

Apple is preparing to release a cheaper 8-gigabyte iPhone 4 for launch within the next few weeks, to complement the iPhone 5.

Asian suppliers say it will be cheaper than the 16- and 32-gigabyte models and use flash memory. The device is expected to sell alongside the iPhone 5 as a replacement for the iPhone 3GS.

Selling a cost-efficient version of the iPhone 4 may allow Apple to attract customers who are looking for a capable smartphone, but are not willing to jump to the price tier of the iPhone 5. Apple made a similar move with the iPhone 3GS when it released the iPhone 4, electing to continue to sell the 8-gigabyte model of the 3GS at a discounted price.

The iPhone 3GS has proven successful, as NPD yesterday announced the 3GS was the number-two selling phone in the U.S. in the second quarter, trailing only the iPhone 4.

Strong 3GS sales show there is a market for a cheaper iPhone option in the U.S., and there is also demand for a more affordable iPhone overseas. Average incomes in emerging markets like Asia are much lower than in the U.S. Google has gained the upper hand in Asian markets because it sells several Android devices at prices consumers can afford.

While Apple has performed well in China, posting impressive second quarter numbers, there are millions of customers who can’t afford the flagship iPhone. The company is consequently in talks with China Mobile, the company’s largest wireless carrier, about selling the iPhone — and an 8-gigabye iPhone 4 with a reduced price tag may be the perfect way for Apple to make a splash in Asia.

Apple is in a unique position since reducing the price of its iPhone 4 isn’t just a play to increase sales, but a strategy to create a presence for itself in an entirely different sector of the market. If Apple can successfully sell a cheaper version of the iPhone 4 to the hundreds of millions of people in China, it may greatly increase its market share, cutting into Google’s in the process.

While speculation runs rampant about the iPhone 5, including when it’s coming and what it will and won’t have, a repackaged iPhone 4 may turn out to be the real money maker for Apple.

This post originally appeared at Mobiledia.