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The Continued Saga of the iPhone Mini Rumors: A New Patent

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The twisted and fascinating web of rumors surrounding a cheaper iPhone aimed at emerging markets.

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Apple (NASDAQ:AAPL) rumors spread quickly and are reported widely. A new one always causes an Internet sensation, with reporters and newsmakers trying to scoop them up, knowing how voraciously our culture consumes news about the world's coolest tech giant. More ubiquitous than Apple products is the awareness of Apple products. My contemporaries in the media and I are subservient to the force of Apple's appeal, but also, we propagate it.

In the news for months now have been rumors of a lower priced iPhone, a supposed iPhone Mini, targeted particularly at emerging markets like China and made to compete with Samsung (PINK:SSNLF), Nokia (NYSE:NOK), BlackBerry (NASDAQ:RIMM), and Google's (NASDAQ:GOOG) Android. Such rumors came to a peak at the beginning of the New Year, until Reuters rescinded a story about the cheap iPhones, after Apple's Vice President of Worldwide Marketing Phil Schiller gave an official interview to the Shanghai Evening News, saying, "Despite the popularity of cheap smart phones, this will never be the future of Apple's products." This statement would later be amended in a different version of the story, but more on that in a bit.

The newest kindling to hit the flames of the budget iPhone rumors is news today of a new Apple patent for a "light isolating protective cover for a small form factor electronic device." In other words, this could very well be a cheaper casing, as opposed to the iPhone 5's aluminum, for Apple's cheaper iPhone. The abstract for the patent gives even more sway to this new rumor (you can read that abstract here at Macworld). One patent does not mean that development is happening -- or even will happen -- but it seems like Apple is at least experimenting with the idea.

The Schiller interview and its aftermath became an interesting and confusing addition to the saga. After the story was originally published, the Shanghai Evening News changed its headline from "Apple will not push a cheaper smart phone for the sake of market share" to "Apple wants to provide the best products, will not blindly pursue market share." In the body of the article, all references to cheaper smartphones were removed, leaving only mentions of a "cheaper, low-end product." We don't know too much about this, but what we do know, Reuters reported: The day after the publication of the originally rescinded article, a story ran about Shanghai Evening News' change, in which it was reported, "Apple confirmed the interview had taken place and that it had contacted the Chinese newspaper about amending its original article, but had no further comment and declined to provide a transcript of the interview."

Does this change suggest that a cheaper iPhone is in fact in the works? That remains to be seen, and all we have for now are the rumors. The problem is, the rumors have not been adding up. I will delve into a Bloomberg piece from January 9 as an example.

The article one-upped a Wall Street Journal piece from the day before by giving a specific price range for the device: $99 to $149 without a contract. As of now, the iPhone 4, which is the lowest grade model Apple still sells, goes for $450 without a contract, $490 in China, and $750 in Brazil. The cheap iPhone Bloomberg reported would be huge news indeed.

Here's where things get dubious: All the recent rumors claim the cheaper iPhone will have the same 4-inch display that the premium iPhone 5 currently has. According to iSuppli, the display accounts for a big chunk of production cost in iPhones, more than the cameras, the processor, and the battery combined (see the cost breakdown for an iPhone 5 here).

Granted, Apple will save money with the rumored plastic as opposed to aluminum body, but that screen, at a production cost of $44 as of September 2012, will make an iPhone with a 4-inch retina display impossible to price under $149 if Apple wants to make a profit. According to Tero Kuittinen of BGR, "Choosing a high quality, 4-inch display would effectively mean that the budget iPhone retail price would have to be at least $300." This would put it much closer to the current iPhone 4 price, and undermine the potential boon of an affordable iPhone.

This is only one of many contradictions surrounding a supposed budget iPhone, but as Walt Whitman wrote, "Do I contradict myself? Very well then, I contradict myself, (I am large, I contain multitudes)." Apple's fan base is large and certainly contains multitudes, as does the media, of which I am a part, that covers the company and the stories around it with such zeal and fascination.

Who knows if we'll see a cheaper iPhone? Today's patent news points in that direction but does not necessarily mean anything. And while we're at it, what about the much rumored Apple TV? Recently, all we've gotten from Apple is the new 128GB iPad. With Apple having changed the landscape of computers, then mp3 players, then online music stores, then phones, then tablets, we're all just hungry to see the Apple revolution continue.

(See also: What Does the New 128GB iPad Mean for the Future of Apple?)
No positions in stocks mentioned.
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