A cheap iPhone would get Tim Cook fired

“I hope I’m as right about this rumored ‘cheap’ iPhone as I was about Apple’s iPad mini,” Rocco Pendola writes for TheStreet. “When iPad mini was about to hit, most everybody said it was going to be ‘cheap’ and would fail. Wrong on both counts. It’s relatively expensive and, as far as we know, a major success.”

“If Apple entered the $199 space against Google and Amazon.com, it would have won. The Nexus 7 and Kindle Fire have a tough enough time competing against premium-priced Apple tablets; there would be no contest if Apple went the inexpensive route,” Pendola writes. “That might sound like an opportunity to you, but it’s not. It’s an easy short-term answer (to a question we should not be asking) that Apple avoided — thankfully — with iPad mini.”

Pendola writes, “Tim Cook breaks a long-standing Apple motto if he… capitulates to what consumers allegedly want as opposed to knowing what they want and prescribing it to them… Simply put, a cheap iPhone will ultimately get Tim Cook fired. If, however, he has small teams working on Siri, Passbook and the next beautiful piece of premium hardware, he could end up going down as the guy who took Apple to the next level.”

Full article here.

MacDailyNews Take: As we wrote back on January 9th: “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.”

Related articles:
If John Sculley says Apple must do this then Apple probably shouldn’t – January 17, 2013
Apple’s Phil Schiller: Cheap iPhone will ‘never be the future of Apple products’ – January 10, 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

11 Comments

  1. Amazing, amazing how a writer, analyst can have more market information and analysis than Apple’s Tim Cook has…every day at his finger tips updated constantly as Apple moves forward.

  2. If Apple enters this market, the phone will be $329 for the 16 GB version and $429 for 32 GB. The iPod touch is $299 for 32 GB, so they will make money if this internally mostly an iPod touch.

  3. Remember if you use the iPod model, Steve Jobs went after that market too based on price, and even the iPod was a better priced solution per song on the device. When Jobs introduced the mini iPod followed by the iPod nano and then Shuffle, BAM door was closed on the competitors.

    All Apple has to do is put a cell radio in the iPod Touch. A good quality product that stands on its own now. Right now Apple charges $299 for the current iPod nano. They can keep that same price sku for an iPod touch cell and reduce the price on the current touch to $249 without the cell radio.

    Game over!

      1. Apple can own this segment if it wants too.

        I have wondered what is taking so long. I am really curious about the math. Can Apple sell a cheap iPhone as a loss-leader and make up the profit on the backend with content delivery? I say it is entirely possible.

        It may also be possible that their economy of scale would allow them to make it cheap enough to profit anyway.

        At any rate, I like you expect them to be entering this market anytime now…

        1. a Phone, a Music player, a Browser and a Camera.

          Apple can succeed in producing an inexpensive Phone that is pure Apple App driven. Merely using core Apple apps – no games or third party instalments. A simpler Smartphone… perhaps with only 4 icons. Perhaps with only ONE button or icon… Siri. Siri embedded on a chip devised to control and navigate all Apple Apps. Simpler to use, simpler to upgrade… simply smarter.

          Think Differentiating.

  4. Apple doesn’t need to release a cheap phone, if they do all across the world other cell companies outside China, and India will immediately cry and want it the next day, result lower margins. And then more crying from Wall Street about margin compression. A never ending cycle to the bottom like HP, Dell or Samsung.

    1. Danox, you seem to forget what happened to the Mac in the 1990’s. Holding onto margins instead of maintaining a healthy market share nearly killed the company.

      Moreover, since nobody has defined “cheap”, the article is meaningless. Apple would make a handsome profit AND improve its market share if it offered both a less expensive iPhone mini AND a flagship iPhone Pro in addition to the mainstream model. Apple has proven this family model to be successful in almost all its other hardware lines.

  5. Time and time Tim Cook has stated it not about market share…..it’s about a great user experience and a quality product. Apple doesn’t need to make a cheaper iPhone in 6 different colors ( that’s why you have cases) or 4 different screen sizes to gain more customers. They are not trying to be all things to all people. If you can afford to buy Apple products you will. If you need to save up to afford one, you will. Apple doesn’t need to make cheaper or different low cost models of the same product to get customers. Again, Apple is not about market share…..it’s about profit and it’s working.

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