Apple (NASDAQ:AAPL) rumormongering is nothing short of a stock market pastime at this point. With as much investor interest as there is for the largest tech company on Earth, plenty of media outlets (including the one you're reading) like to sift through any and all new data and see how much information can be gleaned from within.
Here's the thing, though: it's all fun and games until someone loses their mind.
What's the worst that could happen?
DIGITIMES has always had a spotty track record at best, and at worse disseminates lies. Perhaps that reputation means that DIGITIMES has nothing to lose, so it swings for the fences and hopes to score one eventually. Perhaps they just like to capitalize on whatever recent rumblings are circulating and they hop in and make some stuff up.
Anytime you run into a DIGITIMES report citing anonymous supply chain sources, you wouldn't be misplaced to flip a coin before reading it to get an approximation of its truthfulness. I'll save you the trouble on the latest report: It makes no sense.
DIGITIMES' latest fantastical report claims that Apple is preparing to roll out a lower-cost version of the iPhone to better target emerging markets like China. The device is said to launch during the second half of the year. That part is entirely believable, but then it all promptly falls apart:
Some sources claimed that they have seen the sample of the low-cost iPhone, which will come with a larger display, meeting the prevailing trend for the adoption of 5-inch displays for high-end models. They added that the low-priced iPhone will also have a brand new exterior design.
Here's an oxymoron if I've ever seen one: a low-cost iPhone with a larger display intended to compete with other high-end models. It's almost like DIGITIMES saw two separate rumors about low-cost iPhones and larger iPhones, threw them in a mixing bowl, and saw what came out the other end.
The iPhone's display and touchscreen combined are the single largest components. We're talking about $44, or 22% of the total component cost before manufacturing on the iPhone 5 that features a 4-inch display. Increasing the display and its cost and selling such a device at lower prices is about as un-Apple as it gets.
Industrial redesigns are also pricey, as redesigned products always start at the height of their cost curves, which is one reason why Apple's guidance was even more conservative than usual, since it just redesigned a ton of products. It's possible that Apple may tweak some designs for a lower-end offering, but don't expect any crystalline diamond-cut chamfers on it.
It gets worse
The report devolves further and for some unknown reason discusses some of Qualcomm's (NASDAQ:QCOM) recent Snapdragon processors, specifically the dual-core MSM8960 and the quad-core APQ8064. DIGITIMES posits that these chipsets target "entry-level to mid-range smartphones" as evidence that Apple will launch a low-cost iPhone. What?
First off, those chips target the high-end smartphone crowd. The MSM8960 powers some variants of HTC's One X, which was the OEM's priciest flagship model when it regrouped its product strategy early last year. Perhaps more importantly, that same chip powers many variants of Samsung's Galaxy S3, the flagship device currently giving the iPhone a run for its money.
As for the APQ8064, that processor is found in other flagship devices like LG's Optimus G and HTC's newer Droid DNA. It also powers Google's (NASDAQ:GOOGL) flagship Nexus 4, which is based on the Optimus G. The Nexus 4 is perhaps the only device among the bunch that's arguably a mid-range phone, since it lacks LTE and targets lower unsubsidized price points between $300 and $350. However, that's more a function of Google's grand plan to undermine wireless carriers as opposed to a smaller feature set. Save for the absence of LTE, the Nexus 4 is among the cream of the Android crop right now.
How any of this "may pave the way" for a low-cost iPhone is anyone's guess. It's not entirely clear if DIGITIMES is suggesting that Apple use these chips in a low-cost iPhone. I've entertained the idea of Apple using Snapdragons before, but acknowledged "it never will." Besides, the new A6 chip features custom Swift cores on par in performance with Qualcomm's custom Krait cores and Apple has plenty of older A-chips it can use on a cheaper iPhone.
Finally, some truth
The report concludes by saying Apple is looking to partner with China Mobile (NYSE:CHL) to launch a compatible version of its iPhone to grow its Chinese market share. This is undoubtedly true, but is also about as obvious as saying "Apple likes selling iPhones."
Thanks for nothing, DIGITIMES.
Fool contributor Evan Niu, CFA, owns shares of Apple and Qualcomm. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, China Mobile, Google, and Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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