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iPhone 6 rumor rollup for the week ending Feb. 22

Latest Apple iPhone 6/iPhone 5S rumors: Hardcore quad-core, the PlayStation 4 connection, iCheapo

By , Network World
February 25, 2013 10:07 AM ET
iPhone 6

Page 4 of 5

No wonder we're exhausted.

iPhone 6 or whatever it's called will be a cheaper iPhone

The latest version of this rumor is, apparently, fueled by Katy Huberty's good feelings after meeting with Peter Oppenheimer.

Huberty is a stock analyst with Morgan Stanley; Oppenheimer is Apple's CFO. Apparently, they met recently, and afterwards Huberty, taking word processor to content management system, crafted another of those Note to Investors (NTI) so beloved by the iOSphere.

The RumorNews sites that picked up on her NTI apparently were struck by the Warm Fuzzy Feelings of Confidence that filled Huberty as she emerged from her meeting.

As posted by Business Insider's Jay Yarrow, Huberty wrote the following: "We also see several signs that a lower priced iPhone makes sense:

1) iPad Mini is expanding Apple's customer base with 50% of purchases in China/Brazil representing new customers to the ecosystem.

2) Chinese consumers show a desire to purchase the latest version of iPhone (instead of discounted older generations).

3) iPhone 4 demand surprised to the upside in the December quarter. Even at a low 40% gross margin and one-third cannibalization rate, we see an "iPhone Mini" as incremental to revenue and gross profit dollars."

Huberty seems to be assuming in 1) that iPhone buyers, or prospective buyers, will behave in the same way, and perhaps for the same reasons, as those buying the smaller iPad tablet. What she doesn't establish or at least Yarrow doesn't excerpt is anything that indicates that iPad mini buyers are driven mainly by price - they want an iPad but they want a cheaper iPad. Maybe what they really want is a smaller iPad and they're willing to pay $329 for it.

Number 2 and number 3 seem to contradict each other: in 2, Huberty sees evidence that Chinese buyers want the latest iPhone - iPhone 5 - rather than the older discounted iPhone models. But in 3, she is surprised that iPhone 4 demand was as strong as it was. Perhaps she interprets these two points as evidence that consumers want a cheap new iPhone rather than a discounted older iPhone model.

At 9to5Mac, Jordan Kahn picked up on Yarrow's post, re-interpreting it somewhat to announce that Huberty "issued a note to clients today claiming she is even more confident Apple will introduce a low-cost iPhone following a meeting with Apple CFO Peter Oppenheimer."

Nowhere is Huberty quoted as talking about exactly what she talked about with Oppenheimer, or what he actually said to her. Judging from what we've seen, and heard, from him on several Apple quarterly earnings phone conferences, the answer is "not much."

Apple could eventually start to segment the iPhone market as it has done with the iPad and has done historically with the iPod product line. But the iPod seems to have been viewed as a specialized device - something to store and play music from iTunes. The iPhone is a general purpose mobile computer with the ability to make cellular voice calls. There is a market for low-cost or at least lower-cost smartphones. It's not yet clear that it's a market that Apple wants or needs to play in.

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