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As Apple shares sink, analysts have said the Company should now be looking at a cheaper iPhone.Overnight Strategy Analytics reported  that both the iPhone 5 and its predecessor, the 4S, outsold Samsung’s Galaxy S3 globally in the fourth quarter of 2012.

Apple now has a worldwide 20.6 per cent share of the smartphone market.

Despite this analysts are claiming Apple’s best hope is a cheaper iPhone to open up a new market of consumers, as markets like Australia approach high-end smartphone saturation. The same situation occurred in Australia with TVs with manufacturers forced to deliver cheaper flat screen TV models in an effort to generate revenue.

The Financial Times said that Apple’s financial guidance for the current quarter, issued last month, had already indicated a much lower rate of growth, a move that had further spooked investors fretting about whether the iPhone’s incredible momentum was finally slowing.

This month Apple’s share value has falled more than 15%.

Another indication that Apple is facing a downturn is that long time manufacturing partner, Foxconn, this week instituted a hiring freeze. Despite Foxconn’s official denials, people familiar with the company have told the Financial Times that its staffing changes reflect a scaling back of its manufacturing of the iPhone 5, amid slowing demand for the five-month-old device. Apple declined to comment.

“Samsung will continue to have the advantage – they are attacking every segment of the consumer market,” says Roberta Cozza, an analyst at Gartner.

Apple’s chief executive Tim Cook last month hinted that there could be changes coming to Apple’s production, as many Apple watchers anticipate both cheaper and larger variants of the iPhone in the coming year.

“We have made moves to make things more affordable,” Mr Cook said at last week’s Goldman Sachs technology investor conference in San Francisco, pointing to the reduced-price iPhone 4, which was selling better than expected, more than two years after its launch.

He also pointedly discussed the history of the iPod, which started out as a $400 device and can now be bought for as little as $50 for the basic Shuffle model.

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