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New intrigue on trail of cheaper iPhone

Reuters had cryptically withdrawn a story pegged to remarks purportedly made by Apple's Phil Schiller in China. Now the story's back with a nip and a tuck or two.

The mystery of whether Apple will come out with a lower-priced iPhone has taken a new twist.

The Reuters news agency this morning cryptically withdrew a story it had written yesterday pegged to remarks purportedly made by Apple's Phil Schiller in China. That story had been based on a report in the Shanghai Evening News, which Reuters said, ever so tersely in a short replacement post, "was subsequently updated with substantial changes to its content."

That was it -- "substantial changes," with no elaboration. Intriguing, yes. But also frustratingly vague.

We spent a good part of the morning scouring the Web for further details. We turned Google Translate loose on the Shanghai Evening News site. We put the question directly to Reuters, too, about what exactly changed in the report out of Shanghai. It was a long exercise in futility.

But at about 11:30 a.m. PT, Reuters republished its story, now citing a "revised version" of the interview from the Shanghai newspaper. That revision, Reuters said,

...removed all references to cheaper smartphones, except for a mention of a "cheaper, low-end product." It also amended its original headline from "Apple will not push a cheaper smartphone for the sake of market share," to "Apple wants to provide the best products, will not blindly pursue market share." ...

It was not clear if Schiller had made his original comments or if the newspaper had quoted him out of context.

Reuters added that Apple had contacted the Shanghai publication "about amending the original article." Apple had confirmed the interview took place, but offered no additional comment and declined to provide a transcript, Reuters said.

Drawing on a report from The Next Web, CNET yesterday had reported that Schiller, Apple's SVP of worldwide marketing, supposedly said this in his interview with the Shanghai Evening News: "Despite the popularity of cheap smartphones, this will never be the future of Apple's products. In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit."

There's a subtle but important distinction to be made between the earlier-reported comments and the revised ones as relayed by Reuters. Where yesterday Schiller seemed to be saying no, no, no to the prospect of a cheaper iPhone ("this will never be the future of Apple's products" and "Apple will not push a cheaper smartphone for the sake of market share"), today's update via Reuters has him apparently hedging a bit. (Apple aims to provide "the best products" and "will not blindly pursue market share.") Note: provide the best products and not blindly pursue.

That is, reading between the lines, Apple might in fact someday be quite fine with introducing what it considers to be a well-engineered low-end iPhone in a well thought-out distribution plan. Keep in mind that Apple long pooh-poohed the notion of releasing a smaller version of the iPad, all the way up to the point last year that it introduced the iPad Mini.

So, not for the first time, we'll just have to wait and see.

The comments attributed to Schiller came in the wake of reports this week suggesting that Apple, whose popular iPhone is pricey compared with many alternative smartphones and less powerful feature phones, may in fact be considering adding a lower-cost iPhone to its product lineup for emerging markets.

Just yesterday as well, Piper Jaffray analyst Gene Munster mused that a lower-priced iPhone -- set at, say, $199 -- could open up a vast new market for Apple, on the scale of tens of millions of potential new buyers.

"We believe the opportunity for Apple is too large to miss as the low-end market is growing significantly faster than the high-end smartphone market," Munster added.

"We note that the cheapest iPhone, the iPhone 4, currently costs $450 off contract and more in many countries where additional taxes are levied," the analyst said in a separate note this week. "We note that an off contract iPhone 4 is ~$490 in China and $750 in Brazil, thus the sub-$199 price would be a significant discount. Historically, we believe lower-priced products have had a measurable positive impact on overall revenue (iPad Mini, iPod Nano, iPad)."

The Bloomberg news agency earlier in the week reported, citing sources, that Apple could set a price as low as $99 for a budget-minded iPhone. Both Bloomberg and Munster indicated that Apple could come out with said new iPhone sometime later this year.

Update 11:59 a.m. PT: Added material from the revised story that Reuters posted Friday after having first removed its original story.