Apple planning a cheaper iPhone? Uh-oh

If the rumors are true, it would signal a retreat from the innovation that made Apple stand out. Tim Cook wouldn't do that. Would he?

By TheStreet Staff Jan 9, 2013 2:06PM

By Rocco Pendola, TheStreet  thestreet logo


Supersized smartphones, tablets and televisions sets -- that sums up the innovation coming out of this year's Consumer Electronics Show (CES) in Las Vegas. Other than larger screens for the most popular gadgets and automotive technologies from companies such as Ford Motor (F) and Verizon  Communications (VZ), there's little of interest for the mass market.


Apple (AAPL) is absent from CES this year. That means other companies have the opportunity to pounce. And what do they do with it? Absolutely nothing. 


Google (GOOG) apparently wants to start a price war that Apple (Google hopes) wants no part of. Microsoft (MSFT) CEO Steve Ballmer used his surprise visit to CES to demonstrate that he doesn't have a clue. (Microsoft publishes MSN Money.) Meantime, (AMZN) sits cross-legged in the corner, feigning competition with Apple. 


This all would be good news for Apple, if only the Cupertino, Calif., company were being as routinely pioneering as it's been in the past. But true innovation is at a standstill at Apple these days.

We still have no idea what's going on with the company's living-room plans. Worse yet, we don't really know if CEO Tim Cook has any idea how to move forward with  Apple TV. 

An unfounded rumor? 

Meanwhile, there are reports that Apple will produce a less expensive iPhone at some point in 2013. Freak out a little, it's OK. If the details of the rumor are true, this is absolutely awful news for Apple.

However, consider two important points:


1. The details of the rumor might not be true. We have been through this before with the iPad mini. Most people expected it to cost less than it does. Some even predicted it would be of lower quality than a traditional iPad.  Those predictions turned out to be wrong. Other than screen size and display quality, there's no telling one iPad from the other. It was a big win for Apple.


2. Even if the broad contours of the rumor (a smaller, cheaper iPhone hitting the market this year and selling for between $99 and $149) are true, it may not matter much in the short run.


Apple will sell millions of units. It will chew up and spit out low-end smartphone rivals, allowing Apple to increase its market share in a major way. As a result, Apple's six-to-24-month outlook is pretty good, as long as the competition continues to hibernate after the CES.


Remember, until another company steps up and innovates, Apple remains the leader and everyone else continues to play follow the leader.

Tweaks won't do 

Still, the idea that Apple's scaled-back iPhone would feature (as The Wall Street Journal reports it will) a " less expensive body" with a "shell made of polycarbonate plastic," in lieu of the aluminum housing deployed for iPhone 5, should scare the heck out of you. It scares me. 


Even if "iPhone mini" follows iPad mini's example and hits market with quality parts, high-end construction and a premium price, I would still be scared. These are tweaks your neighbor could come up with, and Apple can get away with it only so many times.


This story, which is potentially a nonstory, will develop. At this point, I simply don't believe the details of the Journal's report. In fact, the whole thing sounds fishy, especially coming on the heels of the multicolored iPhone rumor.

Tim Cook is not Steve Jobs, but he sure as heck isn't stupid.


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Jan 15, 2013 4:43PM
If apple is gonna sell in China Mobile market the phone will be less expensive becasue it can be and still work on their lagging network with the network being the gate in performance. No conflict, no dilution of the brand. They can still give the China mobile customer a quality experience relative to what else is available to them on said network.  I don't see this as a problem.
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