The Macalope Daily: Occam's rumor

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After our flight of fancy the other day, looks like the Apple rumor-making machine once again has its feet firmly on the ground and is back to completely making up things that are far more sensible.

To refresh your memory: Deutsche Bank’s Chris Whitmore predicted that a low-cost, prepaid iPhone would be introduced along with the iPhone 5 in September. Many observers gently pointed out he was just making that up by saying “Hey! You’re just making that up!”

Nature, or Wall Street anyway, abhors a low-cost iPhone vacuum and isn’t done trying to jam something into the category. Not without cause, though, as Apple COO Tim Cook himself said that Apple wouldn’t be ceding any market.

So, once more into the breach, dear analysts, or close up the wall with outlandish cheap iPhone concepts! Actually, this one’s simpler, and the simpler ones usually make more sense.

The latest analyst to chime in on this topic is Mike Abramsky of RBC Capital. He predicts Apple will release a cheap iPhone model when the iPhone 5 debuts. It won’t be a new model, though. Instead, he expects the iPhone 3GS to be offered for free.

At half the RAM of the iPhone 4, it’s somewhat questionable how long the 3GS will continue to be able to run the current release of iOS, but the Macalope has long been more sympathetic to the idea that the low-end iPhone would follow the track of the MacBook as a cheaper, but full-sized and fully-functional plastic unit. The 3G and the 3GS never felt good enough in his hoof to be the iPhone standard bearer.

What he’s less sure about is Abramsky’s prediction that Apple will ship three iPhones starting in September, continuing to sell the iPhone 4 for $99.

That's a lot of iPhones. And having a median option makes it easier for people to justify downgrading. You know what happens when you throw a market-share party, right? You wake up the next day hung over and wondering where all your profit went.

The Macalope feels like a bit like a broken record, but market share in and of itself doesn’t make a company any money. Besides, guess what? Most recent signs point to the iPhone’s market share rising while Android’s is “dead in the water.”

“Android continues to be the most popular smartphone operating system, with 38 percent of smartphone consumers owning Android devices,” wrote Nielsen. “However, while Android also leads among those who recently purchased a new smartphone, it is the Apple iPhone that has shown the most growth in recent months.”

So count the horny one as being furry and skeptical about Apple suddenly deciding to upend its business model. Even more skeptical is this guy:

Keith Bachman of BMO threw a monkey wrench into everyone’s predictions by dismissing the idea of a cheap iPhone and predicting a single, full-featured model - the iPhone 4S.

Keith, Keith, Keith. That kind of prediction is not going to win you any caps-laden headlines over at Business Insider.

Updated at 10 a.m. PT to correct a misunderstanding of Abromsky's argument. The Macalope initially thought he was saying Apple would only ship a $99 new iPhone and a free 3GS instead of three models. Some analysts believe the new iPhone will be an iPhone 5 while other believe it will be an iPhone 4S and the Macalope got his antlers tangled in the web of terminology.

[Editors’ Note: In addition to being a mythical beast, the Macalope is not an employee of Macworld. As a result, the Macalope is always free to criticize any media organization. Even ours.]

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