The Great IPhone Mystery: Will Apple Inc. (AAPL) Make A Cheaper One?

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Apple Inc. (NASDAQ:AAPL) has been downplaying rumors that it will make a less expensive iPhone, but the plot thickens. This morning Reuters withdrew a report that one of the company’s executives had dismissed the creation of a less expensive iPhone as a way to grab market share.

The Great IPhone Mystery: Will Apple Inc. (AAPL) Make A Cheaper One?

The news outlet said the report was based on a report from Shanghai Evening News which was “subsequently updated with substantial changes to its content.” It also said that it would not be issuing a replacement for that story.

Both the Wall Street Journal and Bloomberg have reported that Apple Inc. (NASDAQ:AAPL) will make a cheaper iPhone, and numerous analysts, including Gene Munster, have issued reports about what would happen to the company’s stock if it did create a cheaper iPhone. Rumors have said the company will release its less expensive iPhone in the second half of 2013, possibly with a price tag as low as $99.

Then on Thursday Apple Inc. (NASDAQ:AAPL) marketing chief Phil Schiller was quoted as saying that that even though cheap smartphones are popular, that will “never be the future of Apple’s products.” Numerous news outlets quoted the story on Shanghai Evening News about Schiller saying there would never be a cheaper iPhone. However Reuters rescinded its story and has not updated it with the “substantial changes” that were reported on Shanghai Evening News after the initial report.

At this point the changes in that report are unclear, but it appears as if Reuters might know something we don’t. Either the Shanghai Evening News was mistaken about what Schiller said, or Reuters has had a tip from an anonymous source which discounts what he said.

Information Week speculated further about what changes Reuters could have been referring to. Perhaps he meant that the company wouldn’t make a phone from inexpensive materials rather than a phone that was sold at a low price. His comments also seem to contradict reports in The Wall Street Journal and Bloomberg that suggested Apple Inc. (NASDAQ:AAPL) would use a less expensive polycarbonate frame instead of the aluminum frame that was used for the iPhone 5.

And keep in mind that Apple has not had a history of producing inexpensive products. Over the long term, the company hasn’t been known for creating lower priced products. Apple has reportedly said that the iPad Mini pushed on the company’s profit margins more than it was used to, even though it was more than $100 higher than the product’s closest competitors.

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