A 'Cheaper' iPhone: Absolutely Awful News for Apple

NEW YORK (TheStreet) -- Supersize smartphones, tablets and televisions sets -- that's the innovation coming out of this year's Consumer Electronics Show (CES). Other than automotive technology from companies such as Ford (F) and Verizon (VZ), Vegas has little for the mass market outside of larger screens.

I don't know what to say. It's so absurd I'm not certain if I should laugh or cry.

Back in the day -- you know, last year, the year before -- Apple ( AAPL) captured our attention in the time just before, during and/or after CES. Everybody waited to hear what Apple would do next. While that mood still exists, it's not quite the same.

So, Apple revolutionizes multiple spaces with iPod, iPhone and iPad. The lowest-end Mac proceeds to outclass upper-echelon PCs. Now, with true innovation standing slightly still at Apple, other companies have the opportunity to pounce. What do they do? Absolutely nothing. That's awful news.

The cats at CES don't have a damn thing. All Google ( GOOG) wants to do is start a price war that Apple -- hopefully -- wants no part of. Microsoft ( MSFT) CEO Steve Ballmer is busy being absolutely delusional.

Meantime, Amazon.com ( AMZN) sits cross-legged in the corner, feigning competition with Apple, just as it should.

That's all good for Apple, if only it was routinely pioneering as it has in the past.

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

And then there are the rumors -- we're reportedly going to see a new iPhone sooner rather than later, but in different colors and sizes. And then there's Tuesday's WSJ report that Apple will produce a "cheaper" (though some say "less expensive") iPhone at some point in 2013.

Freak out a little. It's OK. Because, ultimately -- 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 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.

Not so. As some hack predicted on CNBC (!), it's a high-quality, premium-priced device and it's selling well. Other than screen size and display quality, there's no telling one iPad from the other. Big win for Apple.

2. If the rumor plays out as the WSJ projects, this is not good long-term news, but that doesn't matter in the near term.

Apple will sell millions of units. It will chew up and spit out the low-end smartphone category and increase market share in a major way. As such, Apple's six-to-24-month outlook looks pretty good as long as the competition stays CES, Google and Microsoft weak.

Remember, until another company steps up and innovates -- as in does something different -- Apple remains the leader. Everybody else continues to play this uninspiring game of follow the leader.

But, forget everybody else, on its own, the idea that Apple would use, as the WSJ calls it -- "a . . . less expensive body" with "a . . . shell made of polycarbonate plastic" for a "cheaper" iPhone, not the "aluminum housing" deployed for iPhone 5 should scare the hell out of you. It does me. That's something Steve Ballmer would do (just play with a Surface tablet at your local -- empty -- Microsoft retail store).

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

This story, which is potentially a non-story, will develop. As such, we'll all have more to say.

At this point, I simply don't believe the details of the WSJ story. In fact, the whole thing sounds fishy, especially coming on the heels of the multi-colored iPhone rumor.

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

--Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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