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Apple’s Next-Generation iPhone Rumored to Feature a Qualcomm Processor

Apple reported an incredible holiday quarter, with 47.8 million iPhones, 22.9 million iPads, and 4.1 million Macs sold in 14 weeks. This, however, failed to meet Wall Street's expectations, as investors and analysts are concerned with Apple's future, and especially its margins. Fact is, Apple's gross profit margin dropped in the span of one year from 44.68% to 38.63% in the fourth quarter of 2012.

Image credit: Martin Hajek

Image credit: Martin Hajek

However, the good news is Apple is working on an iPhone targeting the lower-end of the market, just as recent rumors suggested. Detwiler Fenton has additional information about how Apple plans to preserve its gross margin and launch this affordable iPhone.

According to the analysts at Fenton, Apple is working on a new product specially designed for the emerging market that'll use a Qualcomm Snapdragon processor.

“It is likely that the work with QCOM is being driven by AAPL’s concern regarding maintaining gross margins as well as the need to differentiate the product by performance,” the research firm (which shuns putting the spotlight on particular analysts) said in a research note. “AAPL would not want a value priced iPhone to offer the same kind of graphics and video support, processing power etc. that its premium priced device would, therefore a less powerful lower-end Snapdragon integrated solution would help segment the product.”

By using the Snapdragon chip and integrating Bluetooth and Wi-Fi, the Cupertino company can merge the three chips used in the iPhone 5 (Qualcomm modem, the application processor and the Broadcom Wi-Fi & Bluetooth combo chip) into one single chip, driving down manufacturing costs and preserving its margin.

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