A cheap Apple iPhone would mean the end of Tim Cook at Apple

“All everybody wants to talk about is the massive opportunity on the low-end in emerging markets. That’s the defense for renewed rumors that Apple will produce not just a ‘cheaper,’ but lower-quality iPhone late in 2013 or shortly thereafter,” Rocco Pendola writes for TheStreet. “That supporters of a less-expensive iPhone have to ‘defend’ the idea tells you much of what you need to know.”

“I expressed concern over a cheaper iPhone but ultimately discounted the rumors. I don’t think Tim Cook is dumb,” Pendola writes. “He will not slum it with a $100 phone made of plastic. Not going to happen. If anything, we have a repeat of iPad mini coming; a situation where people (except for me) expect low-end, but get a slightly less expensive, still premium-priced, high-quality product.”

Pendola writes, “But, let’s assume the rumors are true and Apple mindlessly churns out a cheaper iPhone… I shudder to think of the mess Tim Cook will find himself in a year or three from now if he effectively spits on everything Steve Jobs built at Apple.”

Read more in the full article here.

Related articles:
Dear analysts, perhaps you’ve forgotten, but Apple doesn’t do cheap – January 10, 2013
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012

Why a cheaper iPhone model makes economic sense; next-gen iPhone, budget model may both sport 4-inch screens – January 9, 2013
Low cost iPhone? Apple has no problem cannibalizing its own business, typically with good results – January 9, 2013
Cheaper iPhone could boost Apple’s market share but ding margins – January 9, 2013
Gene Munster: 60-70% chance Apple debuts $199 iPhone for emerging markets – January 9, 2013
Bloomberg: Apple developing cheaper, smaller iPhone for 2013 holiday release – January 9, 2013
WSJ: Apple prepping less-expensive iPhone – January 8, 2013
Apple to launch low-cost iPhone with 5-inch display for emerging markets in 2H13, sources say – January 8, 2013
Barclays: Cheaper iPhone for emerging markets ‘key’ for Apple – December 4, 2012

41 Comments

    1. Rocco is 100% right, Apple doesn’t do “cheap” and never has. Even the lower priced iPods and Macs that came along later were never “cheap” products. Tim Cook isn’t going to start doing that now either.

      1. This guy is a hit whore. If Apple is in the headline it gets attention for him. No one believes that Apple will produce a poor quality less-expensive phone. Rather, just like the iPod and iPad Apple can produce a less expensive quality product with a new iPhone for the lower priced market. But they’re not going to make a cheap, plastic, throwaway phone. This guy is full of crap. He’s a waste of time.

        1. A hit whore among a legion of hit whores who call themselves “journalists”. And MDN gives these clowns more exposure every time they publish one of these worthless articles.

        2. Weekend, can you read? You’ve said exactly what he said. Who’s full of crap? I think you are, for not taking the trouble to actually read what’s clearly right in front of you.

  1. Rocco has long been a Tim Cook-basher. Why? Dunno. He’s just setting up a less-expensive iPhone as a way to hammer Tim some more.

    Just look at the loaded tripe he wrote, “let’s assume the rumors are true and Apple mindlessly churns out a cheaper iPhone”

    Even if Apple made a less-expensive iPhone, it would never do it “mindlessly”. That’s Rocco’s way to plant in the readers’ mind that it would be crap.

    “effectively spits on everything Steve Jobs built at Apple”

    How does Rocco know what a less-expensive iPhone would be, so that he can conclude that it “spits on everything Steve Jobs built”? It’s utter nonsense.

          1. Should be? The site is what it is, a public forum, a bazaar, a gathering of plutocrats and peons, a place where lovers of quality technology engage one another—roughly, at times, considerately at others.

            I do share your desire, however quixotic, for a more mannerly discussion. Still, I couldn’t resist the teasing reference to your taking us all to school. Sorry! 🙂

  2. Apple strive to be the “best in category” and at the moment I don’t see a distinct category of cheaper smartphones insofar as there is no one feature that defines them (unlike tablets where they are smaller), except perhaps the build quality. I know people who loved the smooth plastic back of the 3G and 3GS though. I think Apple could make a cheaper iPhone but I’d like it to be a more “rugged” phone that can take more drops and hits. That would kill two birds with one stone; those who complain the iPhone is too cheap and those who complain that smartphones smash too easily.

  3. 100% Agree. Apple’s philosophy is so obvious it should slap you down. But the pundits keep trying to put them in the same box as most other companies. They have never tried to directly compete with others.

  4. There hasn’t been a plastic iPod for a while, yet they range in price from $49 to $399 and in capacity from 2GB to 160GB. Less expensive doesn’t mean trying to replicate all of the functionality and features of a high priced item with cheaper, less capable parts. These discussions are nonsense if they don’t reflect Apples basic philosophy.

    1. Yes, all you have to do is look at iPod history, and see how a smaller, less functional, but still high-quality version of the iPhone would fare. Also keep in mind the analysts pissed all over every version of the iPod, the iMac, the iTunes store, the retail stores, etc etc. In fact they argued with everything Steve Jobs decided and said he was terrible right up until he was dying. Then they sainted him so they could call his successor terrible.

  5. Rocco is 100% correct.

    iPhone 5 is a $700 phone with 55% margins. There is no way to deliver that type of product experience in a $100 device.

    Nor should they sacrifice or dilute the brand reputation for the bottom of the market.

  6. I posted this before and will post it again:
    I see this differently: Steve’s wish was thermonuclear war with all the funds at Apple’s disposal against Google. So if they DID cut the margins on a lesser priced phone to 20 – 25%, the “war” would do huge harm to the Googlites and thier ilk. Perfectly in line with SJ’s wishes!

    You do NOT have to make “cheap” “crappy” products to lower the prices. As mentioned by many, last years models of iPhones are still years ahead in the User Experience. And the Mfger’s toolings are still availble to make the same quality phone with minor up-to-date modifications to bring even the older models inlne with todays needs without increasing prices. AND continue the thermonuclear war on the Googlites!

  7. The article is absolutely correct. There is NO WAY Apple will make a cheap product. Apparently, though, some readers aren’t quite clear on the meaning of ‘cheap product’ in this context. A $100 smartphone is cheap. A $200 smartphone is still cheap. If Apple were to decide to extend the lower end of the IPhone line, I can’t possibly see it going below $350 or so.

    If you compare the iPod line with the competition, even the cheapest shuffle was never less than twice the price of the comparable competitor (in terms of memory capacity and feature set). With the more expensive models in the line (the nano and the touch), the price difference between them and comparable competitors was somewhat narrower, but at the bottom end, you could always find similar devices for half the price. The same goes for the Mac line, as well as for the current iPhone line (with the cheapest currently available model, iPhone 4, selling for $450 in the USA).. A comparable non-iPhone (specs-wise, of course) would probably be something from Samsung or LG for about $250. While there is more space below that price level (with some new Androids from Pantech, Huawei and similar, selling for less than $100), I can’t possibly see Apple spending effort to design a new phone (and a new production line), only to sell it for $200 or so. Even at $350, it would be a big surprise if they did, and would only devalue the brand, without bringing significant additional amount of revenue. Let us not forget one cardinal thing: market share without revenue is extremely difficult to support and sustain. Unlike EVERY single other phone maker, who have practically zero overhead related to supporting their devices once they’re out, for EVERY single iPhone, there is iCloud, iTunes eco-system, App Store eco-system, all of it supported by Apple (and not some third-party, such as Amazon or Google…). The profit margins on Apple gear aren’t just to pad the cash war chest that Apple has already amassed; they are there to pay for all the infra-structure and services that exist to support Apple’s complex eco-system. Somebody has to pay for that Maiden data centre, and Apple suere ain’t in the business of selling advertising (and customer data) to the highest bidder…

  8. I have been trying to figure how it would be possible for Apple to do this…and still put out a quality product AND maintain profit margin (this is Apple, remember!).

    The only way I can see it is the iPod touch with talk capability ….and no cellular data. You would essentially have an iPhone but only have data on wifi. It would appeal to a large segment of those on a budget (lower initial cost + no data charges), and would still provide enough differentiation from a full blown iPhone. The phone carriers would hate it, but it is the only answer I can come up with.

  9. “”As mentioned by many, last years models of iPhones are still years ahead in the User Experience””

    ——————-

    Actually, I’d have to disagree. As much as I love Apple and despise Google, I have to admit that Google has done a much better job of ripping of the iOS user experience than Microsoft ever did in the windows/Mac battle.

    Of course iOS still has the advantage, but minus the fragmentation issues the Android user experience is not awful.

    1. Well, superficially, Android UI may look like iOS. However, similarities end very quickly.

      Having an Android phone for two years, I can confirm that it is nowhere near as consistent, intuitive and simple as iOS (which I’ve been using on iPods and an iPad for over two years). And the simplicity is the most significant aspect of it. On an Android, rogue applications often stay in the background, sucking up processor cycles and battery power. Things like Shazzam and Google Goggles often love to stay in the background and do something, even though I have long switched to, for example, Google Maps (with navigation). If I don’t go in and manually kill them, my anemic LG phone will soon freeze (or stutter to the point of complete uselessness, especially on apps such as navigation). And manually killing an app is a deeply labyrinthine process. One must call ‘System Preferences’ from whence one looks for ‘Applications’, then ‘Running Applications’. There, one is presented with a list of applications and/or processes, names of which often make no sense whatsoever (among the few actual app names, there are things such as com.android.DunServer, com.android.providers.applications, Dialer.Storage, Contacts Storage, DRM Protected Content Storage, Google Services Framework, com.android.providers.userdictionary, etc). So, I have to wade through dozens of these nonsensical applications, clueless about their purpose and why they must be running at all times, before I find my Shazzam, Goggles or whichever the offending application is sucking my resources.

      This is but one minor example of Android’s myriad layers of complexity piled on top of iOS’s simple, intuitive user interface. I could write a solid book with similar examples.

      1. Yep you could write a book, but there’s no need to. I agree with you and as I said, iOS has the advantage, but for most Android users (that i know) the user experience is not awful.

  10. Rocco wrote: “However, if you’re thinking long-term here, be afraid.”

    That tells you conclusively how little he understands of Apple.

    Under Steve Jobs Apple learned to focus not on the fad solution of the moment but on the essence of what the consumer was trying to achieve, and if they were to be given that solution, what would they really need then.

    The netbook fad is a perfect, and timely, example of this: Did consumers really just want a cheaper laptop? Cheaper as in price cheaper or in feature cheaper or in capability cheaper? And what was the correct balance between capability, quality and price? The end result wasn’t a netbook from Apple, it was the iPad from Apple. And when released it killed the demand for cheaper laptops because Apple got the balance right.

    So if you think “long term” you need to be afraid, then you really are saying you don’t think Apple learned the lessons Steve Jobs tried to impart. Since I was there for two decades, I can say with some certainty that those lessons are deeply ingrained in the psyche of engineering and product management. Which tells me that whatever tidbits of overheard information have led some to believe that Apple is developing a “cheap” smartphone for developing markets are in fact tidbits of Apple exploring some new approach to the solution feature phones have tried to bring to the world.

    To illustrate how overheard tidbits lead to such rumors, revisit the “SnApple” rumors of the Spindler era: One day the rumor broke that Sun was going to buy Apple. The rumors eventually died for lack of reality, but Sun did “buy” something from Apple: They bought the building that was for many years the mailing address of Apple Computer, Inc. – 20525 Mariani Blvd. Apple has since reacquired that building, but the lesson of rumor development remain valid.

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