Phil Schiller dismisses cheap iPhone rumors

Over the past few days, there have been a number of reports pointing to Apple possibly releasing a lower-cost iPhone sometime in 2013.

To that end, Phil Schiller recently sat down for an interview with the Shanghai Evening News where he effectively dispelled the notion that Apple would produce a cheaply made iPhone.

“At first, non-smartphones were popular in the Chinese market, now cheap smartphones are more popular and non-smartphones are out. Despite the popularity of cheap smartphones, this will never be the future of Apple’s products. In fact, although Apple’s market share of smartphones is just about 20%, we own the 75% of the profit.

The takeaway from this, of course, is that Apple  is more concerned with profits than they are with marketshare. This is nothing new, but let’s not confuse cheap smartphones with more affordable.

The iPad Mini is by no means cheap, but it’s certainly more affordable than the flagship iPad 4th generation. Similarly, a more economical iPhone might be a boon for Apple to the extent that they make more money per device sold than they currently do selling older generation models at steep discounts.

The looming question is whether or not Apple can make an iPhone for cheap and not have it suck. Remember that the iPad Mini’s pricing matrix was somewhat higher than folks were anticipating simply because Apple wasn’t willing to make a tablet that was second rate. What’s more, Apple has admitted that its profit margins on the iPad Mini are much lower than what it’s accustomed to with the rest of its product line.

All that said, perhaps this indicates that Apple is simply not willing to copmromise on materials in the interest of releasing a cheaper iPhone to attain marketshare and generate profits via volume.

John Gruber directs us to the following quote from Steve Jobs circa 2008.

There are some customers which we chose not to serve. We don’t know how to make a $ 500 computer that’s not a piece of junk, and our DNA will not let us ship that. But we can continue to deliver greater and greater value to those customers that we choose to serve. And there’s a lot of them. We’ve seen great success by focusing on certain segments of the market and not trying to be everything to everybody. So I think you can expect us to stick with that winning strategy and continue to try to add more and more value to those products in those customer bases we choose to serve.

An apropos quote, to be sure, but there’s no denying that in a market that is becoming increasingly saturated with “me-too” devices, consumers are largely becoming more cost conscious than ever before. The differences between the current-gen iPhone and the latest and greatest from Samsung are smaller today than they’ve ever been during the last 4 years. Indeed, the very reason why the iPad Mini has been flying off the shelves is because many consumers nowadays expect a premium experience at a non-premium price.

My take?

A lower cost – read: not cheaply made – iPhone will hit stores sometime in 2013.

via The Next Web

Edible Apple

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