Apple’s Phil Schiller: Cheap iPhone will ‘never be the future of Apple products’

“Apple SVP of Worldwide marketing Phil Schiller gave an interesting interview to Chinese newspaper Shanghai Evening News yesterday. In the interview, he directly addresses the rumors surrounding a potential cheaper iPhone, saying that this will ‘never be the future of Apple products.'” Matthew Panzarin reports for TNW. “We have verified with Apple that this was an official interview.”

“Interviewer Huang Yinlong spoke to Schiller about Apple’s products in China who said that ‘every product that Apple creates, we consider using only the best technology available. This includes the production pipeline, the Retina display, the unibody design, to provide the best product to the market,'” Panzarin reports. “‘At first, non-smartphones were popular in the Chinese market, now cheap smartphones are more popular and non-smartphones are out,’ Schiller added later. ‘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.'”

Read more in the full article here.

MacDailyNews Take: Translation (which we provided rather presciently yesterday): “You can bet that if Apple enters the pre-paid phone market in emerging markets, they most certainly will have margins and they will make a profit on each device sold.”

Please see also, from our own SteveJack: Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012

Related articles:
A cheap Apple iPhone would mean the end of Tim Cook at Apple – January 10, 2013
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

42 Comments

    1. and on Friday AAPL will drop 35 points.

      In other news, a gallon of regular is going for $3.04 in my neighborhood. I wonder if there’s any correlation of gas prices and AAPL share prices?

  1. “In fact, although Apple’s market share of smartphones is just about 20%, we own the 75% of the profit.” Not we have, not we get – no, WE OWN! Well stated. And for all those pesky fools out there who want to talk about market share, take your grocery store margins and see exactly what they get you except for always being on the edge of falling into irrelevance.

    1. “…cheap smartphones, this will never be the future of Apple’s products…” is not inconsistent with “new products that make phone calls and do other useful things”. The differences between the iPod nano and the iPod touch are great, yet they are both quality Apple products, each with its own user base.

  2. They WILL make a cheapet phone for Chona Mobile (at the very least), it WILL spook Wall Street, and it WILL be a very opportune time to buy more Apple stock. They WILL manage the marketing perfectly, and all you naysayers WILL claim that you never doubted it for a minute.

    1. Nicely done Tom. And Schiller simply said that they wouldn’t make a throwaway phone. I do remember that there was going to be no iPad Mini too. That seems to be doing quite well. They will make a lower priced iPhone or entry-level iPhone whatever you want to call it. It will appeal to the emerging markets customers who cannot afford a new iPhone. It will have margins albeit not as good as the high priced iPhone but it will still have good margins. iCal this. Let’s revisit this in 6 to 8 months.

  3. thx Schiller, finally u said it loud & clear.

    maybe now the anal-ists can stop their f’g silly ass rumors to manipulate the AAPL stock to no end into disneyland territory when it’s the world’s most fundamentally sound tech firm at least.

    why don’t he anal-ists make some honest money for a change, minus the stupid games. if anything it is our gov. that needs to stop the dishonesty & corruption. of course some republican capitalists will now bit now bitch that that IS perfectly legal capitalism or that it is the only way the market works, but Capitalism works without manipulation to that degree.

    1. So, what is Apple going to have to do to get on Wall Street’s good side. I’m thinking that Apple doesn’t want to have to go change its company values and go after major smartphone market share (which isn’t possible for Apple to win). But what’s going to happen to Apple shareholders if the stock keeps getting pummeled because Wall Street doesn’t particularly like Apple’s company values? There has to be some happy medium here. I still think selling hardware is no longer going to work for Apple to get into Wall Street’s good graces. Apple never seems to sell enough iPhones to please these investors, whoever they are. It’s also possible that no matter what Apple does, even if it does sell cheap iPhones, it will still be Wall Street’s pet whipping boy.

      You’d figure with a company taking most of the profits in an industry, that would be more than enough to please investors, but it’s not working out that way and I don’t understand why. I would think the whole idea of running a successful business would be based on company profits and not market share. So, exactly what is the problem with Apple’s stock not being able to hold a share price merely in-line with computer and smartphone industry’s P/E level. The current P/E of under 12 is just absolutely ridiculous. There really has to be some share value standard for investors to wisely choose stocks to invest in.

      1. Apple is eating everyone’s lunch, that’s the reason there’s such a consorted effort to tarnish it’s fanfare and sink big bucks into anything that turns Apple’s fanfare sour. It’s the big money that’s getting shafted by Apple’s disruption of good old boy abusive practices and demolition of stagnant models that Apple is destroying. They can’t innovate and have no quest for excellence.

        At the end of the day, all Apple has to do to negate all the lies and FUD is keep performing like it always has and there will always be a loyal following that appreciates it’s standards of quality and customer care. You can’t keep a good company down.

      2. NEWSFLASH! Apple is not in the business of pleasing Wall Street, or its investors. As an investor, if you don’t like the ride, get off! Apple will continue to make great products at a fair price, and keep making money hand over fist. Apple really does not need investors. It has all the operating cash it needs. I’m convinced that was the strategy behind its cash hoarding. Now Apple can thumb its nose at Wall Street and do what it does best, and do what it believes is best for Apple. If you like that strategy, then go long AAPL and stay there. It’s worked for me to the tune of roughly 4000% profit over the last 10 years.

        That said, I hope Schiller’s comments signify a change in philosophy at Apple, and a new willingness to slap down silly rumors that affect future sales. Way to go, Phil and Apple!

  4. As the full article points out cheap vs price points are two different things.

    If Apple wants to increase scale, take the iPhone 4S and repackage it, they can get to a higher volume, lower price point product, but that doesn’t make it’s materials inferior, or it’s build quality or software some thrown-on-their OS. In other words, it’s not “cheap” but it would run with a lower price point.

    A high-volume, re-designed and slightly improved 4S at $299 would crack open the high-end of many emerging markets for Apple.

    1. Hell, I might buy one of those for the emerging contract-free US market. I like my iP4, except for the absence of Siri. A bought outright iP4S for $100 more than the contract upgrade price of an iP5 is pretty attractive, especially when coupled with a lower cost, contract-free service plan, like T-Mobile is said to be getting ready to offer. Especially considering I have an iP4 that can be sold for roughly half the cost of the new phone.

      I think the cellular industry is about to get schooled by Apple one more time. First it was ATT being shown the way and making a lot of money at it, then it was Verizon, recapturing lost customers after they were able to offer the iPhone, then it was Sprint, becoming a turn-around because of their iPhones with unlimited data plans. Now it will be the customer-owned iPhone on any provider who is willing to offer dumb pipe service at the lowest cost. What if the New iPhone 4S is the device T-Moble is waiting for? Or Virgin Mobile?

      We live in interesting times.

  5. This is why apple is great and will continue to be great. Quality. The analysts will continue to spew their failed ideas as they miss the genius of apple. It would be more amusing if many readers were not falling for their garbage.

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