By now, most of the world knows what an iPhone is — and they know it typically doesn't come cheap.
That is the problem Apple faces. Analysts say it must decide whether to keep catering to the high end of the phone market, reaping fat profits from relatively fewer sales, or offer something cheaper to compete with lower-cost alternatives like Samsung's phones.
Worries about low-cost competition weighed on Apple's stock on Monday after reports that the company had reduced orders of screens for the iPhone 5, suggesting that demand for the phone could be weaker than expected. The company's shares dropped 3.6 percent for the day to close at $501.75; they have slid 29 percent from their high in September.
The long slump in the stock price has increased the pressure on the company to produce a solid earnings report on Wednesday, when investors will be looking closely to see how strong iPhone sales were.
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The iPhone is still a top seller in the American market. But it has a tougher time competing in other markets, where consumers buy phones without a subsidy from a wireless carrier. In countries like Brazil, Germany and Spain, the iPhone 5 can cost $650.
And even the cheaper iPhones, like the 4 and 4S, are more expensive than the cheapest Android phones, said Tero Kuittinen, an independent mobile analyst and vice president of Alekstra, a company that helps people manage their cellphone bills.
"The people buying their first smartphones now are lower-income households," Mr. Kuittinen said. "They don't have enough money to have $650 to pay for a smartphone."
Analysts say that in the earnings report, they will pay special attention to the average selling price of iPhones to determine whether the iPhone 5 is still the hot seller or whether cheaper models are making up a majority of sales. The trend might help determine whether Apple will eventually introduce a new lower-end iPhone.
Apple does appear to be cutting back on orders for its latest iPhone from its manufacturing partners, as Nikkei of Japan and The Wall Street Journal reported earlier. Paul Semenza, an analyst at NPD DisplaySearch, a research firm that follows the display market, said that for January, Apple had expected to order 19 million displays for the iPhone 5 but cut the order to 11 million to 14 million. Mr. Semenza said these numbers came from sources in the supply chain, the companies that make components for Apple products.