DIGITIMES: Apple Developing A Cheap iPhone With A Giant Screen

Big report today from Taiwanese paper DigiTimes on Apple's plans for the iPhone.

It says Apple is working on a cheaper iPhone aimed at China and emerging markets which it will roll out in the second half of the year.

It also says that some sources have seen an early version of the phone. It will reportedly have a larger screen and "a brand new exterior design".

DigiTimes also says Apple has been influenced by the success of the relatively low-cost iPad Mini to introduce a low-cost iPhone.

OK. That's the news. Let's unpack it a bit.

Do we trust DigiTimes? The paper has a mixed track record. But, it's pretty accurate when it comes to information from its supply chain sources, so we're willing to believe parts of this report.

Topeka Capital analyst Brian White reported Apple was working on a phone with a bigger screen after he returned from China.

However, a lot can change for Apple between January and the second half of the year. It might not be able to manufacture the phones to its liking. Component pricing might not be where it wants it to be. Lots can go wrong.

In 2011, Bloomberg, which is as accurate as it gets, reported Apple was making a smaller, cheaper iPhone to address emerging markets. That never panned out.

That said, it makes sense for Apple to do something to address parts of the world where pre-paid phones are more popular than subsidized phones bought with carrier contracts. This could mean a decline in profit growth, and margins, but if Apple wants to preserve unit growth and go for market share, we're not sure it has any other choice.

Putting aside the "cheap" part of the report, it sounds increasingly like Apple is working on a redesigned iPhone with a bigger screen. If this is true, it's a major departure from Apple's recent style of waiting a year to redesign the phone.

The rise of Samsung and the hyper-competitive smartphone market probably wouldn't let Apple sit still for a year.