Confusion in the Apple-verse as Reuters ditches 'no cheap iPhone' claim

It didn't look good for the iPhone mini last night as statements from Apple [AAPL] marketing chief, Phil Schiller, seemingly rang the death bell for claims of a smaller, cheaper iPhone from the firm. Reuters later retracted its report, leaving company watchers in the dark: will they, or won't they, ship an iPhone for the masses?

[ABOVE: With travel onthe mind of Cupertino's top executives, here's some lovely travel photographs by Kevin Russ -- all shot on an iPhone.]

The tangled web

It's a tangled web in the land of rumor and conjecture as conflicting reports, company statements and speculation stir the pot of expectation as to Apple's 2013 product plans.

Reputable reports (Bloomberg, WSJ) have claimed Apple intends introducing a new model iPhone to grab a larger slice of the mid-range smartphone market. Claims in favor of this stretch back many years, creating a rapidly polarizing public perception with champions both for and against these claims.

In brief, it has been claimed that Apple's making plans to introduce a smaller iPhone-related device, equipped (some say) with a smaller screen and Siri support.

This spectral speculation seemed exorcised last night when Apple's Phil Schiller told the Chinese language Shanghai Evening News that cheap smartphones "will never be the future of Apple products".

[You can read the laughable Google translate version of the Chinese report here.]

[ABOVE: Completely irrelevant clip, the trailer for hilarious movie, 'Best In Show'.]

Best in show

In the report Schiller seems to be saying Apple is only interested in offering the best in class products, observing market share to be of little concern to the firm, which expects to do very well in China.

It should surprise no one that Apple chose China to make these claims -- as I've said forever, China will be Apple's biggest market. Overall, the Asia Pacific accounted for over 53 percent of the global smartphone market in Q3 2012 (Canalys).

There's no way Apple wants people in China to expect a cheaper iPhone when it seems on the edge of inking a deal with China Mobile to bring its present device to 200 million Chinese phone users.

Many media outlets jumped on the report as proof that Apple has no plans to introduce an iPhone mini/nano. These two things aren't necessarily true -- a smaller phone doesn't need to be a cheap phone.

This morning Reuters withdrew its report:

"Reuters has withdrawn the story headlined "Apple exec dismisses cheaper phone as a market share grab-report" which was based on a Shanghai Evening News report that was subsequently updated with substantial changes to its content."

Reuters adds: "No replacement story will be issued."

Confusion, consternation and doubt

I sense the hand of Apple PR -- clearly something within the original Chinese report was inaccurate, so the company had changes applied. It also sounds possible Reuters was asked to update or remove its tale on the tale, leaving all of us dazed and confused.

Experienced company watchers will know its senior executives usually take pains to tell the truth; though at times they tend to wrap these truths inside shrouds of puzzle. (Who can recall Steve Jobs on smaller tablets, for example?)

In this case, you could translate Schiller's remarks not to mean the company won't try different device configurations, just that it won't join the party at the very low-end.

With that in mind the notion that cheap will never be the future isn't so surprising; it just means that in the event Apple were to introduce a new configuration of its iPhone it would ensure the device was a good product -- even if it wasn't a cheap product.

Apple says it is only interested in being at the leading edge of smartphone manufacturing. This means its flagship iPhone will be a high-end product; it also means any accompanying devices in its phone range will be unique, top class products in their own right.

Not broke? Don't fix it

As reported before Reuters ditched its story, Schiller also said: "Every product that Apple creates, we consider using only the best technology available." He stressed that while many Chinese consumers are switching from feature phones to low-end, cheap smartphones: "This is not a direction that we want to be heading in with our products."

More compellingly, Schiller pointed to Apple's profit margins on its existing device, which gives the company 75 percent of the profits made in the smartphone business. This explanation seems to suggest that so long as the company continues selling millions of the devices, it's not about to introduce a low cost model.

The thing is, the notion of an iPhone nano doesn't necessarily imply a low cost offering. It may simply be a different product. An additional product configuration shouldn't necessarily be expected to be a cheap product, just a different product for a different market (as posited in this article from last year).

Managing expectations is a big problem for Apple. On the one hand it doesn't want its customers to expect things that it doesn't choose to ship, on the other it likes to keep its product plans as secret as possible.

The original Chinese report and Reuters' subsequent retraction add a little too much smoke to the cloud of speculation as to the company's future smartphone plans. The overall effect of which is to draw opaque conclusions:

  • Apple may, or may not broaden its iPhone family with new configurations.
  • Should it choose to broaden its available smartphone range, it won't be competing with low-end (cheap) devices.
  • Whatever products the company does choose to ship will maintain its reputation for high-quality design and well-manufactured devices.
  • Don't hold your breath waiting for a smaller iPhone.
  • Don’t be surprised if one appears.
  • Don't be surprised if it doesn't.

Which leaves the philosophers and soothsayers of the Cupertino-watching universe plenty of space for prediction and conjecture, while also basically warning customers not to expect a cheaper Apple.

Clear as iMud, in other words. Though not as cheap as chatter.

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