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iPhone 5 handson11

The twists and turns in the cheap iPhone saga are enough to give you whiplash.

Reuters this morning announced that it has withdrawn a story that said Apple marketing head Phil Schiller had dismissed the idea of a cheaper iPhone. The news organization cited “substantial changes” to the report the story was based on from the Shanghai Evening News.

Update: In a new story this afternoon, Reuters points out that the Shanghai News story was changed to remove references of cheaper smartphones. The story’s headline was changed from,  “Apple will not push a cheaper smartphone for the sake of market share,” to “Apple wants to provide the best products, will not blindly pursue market share.” Apple confirmed with Reuters that Schiller did chat with the Chinese paper, and that it contacted the paper about making the changes.

By rescinding the story, Reuters continues to fuel the rumors that we’ll see a cheaper iPhone sometime this year.

In our coverage of the Shanghai Evening News story, our own John Koetsier noted that Schiller’s comments weren’t trustworthy. Apple may not want to build a “cheap” and flimsy iPhone, but the company may well decide to make a less expensive iPhone to increase its penetration in China.

Recent reports from the Wall Street Journal and Taiwanese news site Digitimes sparked this latest wave of cheap-iPhone speculation. Apple’s cheapest iPhone at the moment is the iPhone 4, which is free with a two-year contract in the U.S. But it’s still pretty expensive off-contract, costing $450 in the U.S., $490 in China, and $750 in Brazil, according to AppleInsider.

There’s no doubt Apple will want to drive down the cost of the iPhone for markets like Latin America and China.

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