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1/10/2013
04:36 PM
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Apple Downplays Cheap iPhone Reports

Apple's Phil Schiller said the company will not sell cheap iPhones. But as is always the case with Apple, it doesn't do something until it does it.

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Apple moved to discount stories posted by The Wall Street Journal and Bloomberg that suggested the company might debut a low-cost iPhone before the end of the year.

Apple's senior VP of worldwide marketing Phil Schiller told the Shanghai Evening News in an interview that inexpensive iPhones would "never be the future of Apple products."

Schiller's statement appears to throw cold water on the sources cited in the Journal and Bloomberg reports, both of which provided details on how Apple would produce a low-cost iPhone. They suggested that Apple would ditch the aluminum frame used in the iPhone 5 and switch to polycarbonate, which might be cheaper to manufacture.

The timing of Schiller's comments could also be coincidence, and it's worth noting that the company generally chooses its messages carefully. Schiller is no nube, and has plenty of experience talking to the press. Also, cheap doesn't necessarily mean inexpensive or low-cost. Schiller could have been saying that Apple will never skimp on materials and manufacturing processes to produce cheap(er) goods.

Further, Apple is normally aggressive about maintaining its margins. A low-cost iPhone doesn't necessarily gel with Apple's long-term behavior and strategy regarding entry-level products. Apple admitted the iPad Mini squeezed its margins a bit, even with a price tag that is more than $100 above its closest competitors.

Last, it is important to remember that Apple is always researching and designing new products. Products that reach retail typically go through several generations of design before being finalized. It is possible that the sources cited by the Journal and Bloomberg were exposed to products that are still in the research and design phase that might still be years from reality.

As is always the case with Apple, it doesn't do something until it does it.

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