Shares in Apple plunged more than 5% as investors feared that the company’s new, cheaper iPhone model is still too expensive for emerging markets.
The tech giant released the two latest models of the phone on Tuesday – the iPhone 5S and a less expensive 5C.
However, analysts have criticised the basic 5C model, which with 16GB storage has been priced at £469, for being too costly for emerging markets – the price is comparable to that of the iPhone 5.
Shareholders had hoped the model would be cheap enough to attract new customers in China and India – where it has struggled to expand with competition from other companies like Samsung and Huawei.
"Even though Apple has a lower-end iPhone now, its price is still considered mid-end in China and not low-end," Sandy Shen, a Shanghai-based analyst for Gartner, told Reuters.
"Considering Apple’s old rival Samsung and domestic players such as Huawei, Lenovo and Coolpad all have phones in that category, Apple will still lose out in market share in these key segments."
Toni Sacconaghi of Sanford C. Bernstein & Co, added: "Apple continues to risk being relegated to a high-end niche player, akin to its role in the PC market – a real shame, given its pronounced first mover advantage in smartphones.
"Most first time buyers of sub-$300 smartphones are purchasing Android phones, meaning that it will be increasingly difficult for Apple to migrate those users from the Android ecosystem at a later date than if Apple could have attracted those same users to iOS in the first place."
The 5S features a fingerprint scanner called Touch ID, confirming rumours about the biometrics technology after screen grabs released on Twitter of Apple’s iOS 7 software code indicated that such technology could feature in the new model.
Apple shares closed at $467.7 on Wednesday, a drop of 5.4%.
