Analyst: Lower-Cost iPhones Expected in June

Apple could unveil a lower-cost iPhone in June, a handset designed to address the two major barriers to adoption: cost of hardware and cost of the service plan, one analyst said Friday. The cost of iPhone hardware stops 85 percent of people, while the service plan is a barrier for 66 percent.

“We expect Apple to launch new iPhones in June that offer both a lower total cost of ownership and new functionality, potentially including gesture-based technology,” Morgan Stanley analyst Katy Huberty told investors.

Such a cost reduction could give Apple 15 percent of the handset market and a $200 average carrier subsidy, catapulting stock to $358 per share, Huberty said.

When Apple introduced the iPhone in China last year, a major obstacle was cost. Millions of Chinese either buy gray-market iPhones able to operate on any network or a pre-paid handset. Apple announced Thursday plans to open 25 stores in China over the next two years.

Huberty released a rather bullish projection for iPhone sales in 2010, predicting 6 million iPhones for the calendar year, higher than the 3 to 4 million average expected by Wall Street.

The analyst also forecasts 6 million sales for the iPad in 2010, prompted by “better than predicted demand” for the gadget. Apple’s tablet device, expected to ship in March will hurt sub-$800 notebook sales, a 120 million unit market globally and 30 million unit sector domestically.

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Huberty, once known as being negative about Apple pricing, now considers the Cupertino, Calif. company the “clear winner in the battle over the mobile Internet.”

[Via AppleInsider and Fortune's Brainstorm Tech]

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