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I saw somewhere that Apple doesn't allow new apps to target less than iOS 7. Is that correct?

No, Apple requires apps to target at least iOS7, and as far back as is practical.

Depends what you mean by "target". You can specify the whatever minimum OS version you want for an app.

You have probably heard something like "[After Feb 1] new apps [...] must be built with the latest version of Xcode 5 and must be optimized for iOS 7."

That only means you must use the latest dev kit and satisfy some other requirements. It does not mean that you need to disable support for older OSes.

Ahh I see, thanks!

It is not trivial to support ios7 with the latest gui elements (ios7 sdk) and also support prior versions. Practically speaking you will need to support only ios7+ after feb1, which for me is a lot of development work which is not worth doing with the income my apps give. I am therefore no longer supporting my apps.

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