Comments from Apple exec Tim Cook hint at lower-priced iPhone options
New comments from Apple Chief Operating Officer Tim Cook that Apple doesn't want its products to be "just for the rich" have fueled speculation that the company is interested in offering a cheaper iPhone.
Bernstein Research analyst Toni Sacconaghi met last week with Cook, Apple Chief Financial Officer Peter Oppenheimer, and Vice President of Online Services Eddy Cue. According to Forbes, the analyst came away with the impression that Apple is "likely to develop lower priced offerings" in its handset business.
Cook also reportedly said that Apple is planning "clever things" to compete in the prepaid handset market. He also said that Apple is "not ceding any market," and the company doesn't want its products to be "just for the rich."
Cook's comments, and the analyst's interpretations, come soon after two prominent publications claimed that Apple is working on a new, smaller, $200 contract-free iPhone that it could sell directly to customers and bypass wireless carrier contracts. Both Bloomberg and The Wall Street Journal said that Apple's alleged plans were in an effort to compete with Google's growing Android mobile platform.
But another mainstream publication, The New York Times, rebuffed those two reports only days later, and said that Apple is not developing a smaller handset. However, it was reported by the Times that Apple has explored opportunities to create a less expensive iPhone.
In his meeting with Sacconaghi, cook reportedly referred to the iPhone as "the mother of all halos," as the handset has expanded sales of Apple's other devices, particularly in emerging markets. Apple has long referred to sales of the iPod -- and later iPhone -- as having a "halo effect" that drives sales of Macs.
And one emerging market where Apple has found great success in a short period of time is China. Cook reportedly acknowledged that Apple has spent "huge energy" in China, and also noted that it is a "classic prepaid market," which would be an ideal candidate for a cheaper iPhone.
The company is also said to be looking to expand its carrier partnerships. Oppenheimer said that Apple has 175 carrier partners, while rival Research in Motion, maker of the Blackberry, partners with 550 carriers.
Cook also said he believes the tablet market will eventually be bigger than the PC market, and that competition for tablets will be even more intense than with smartphones. He also hinted that the company has interesting new things in its product pipeline.
Finally, Oppenheimer also said that Apple's current capital structure is not efficient. He said the company is likely to use its cash to secure supplies of key components, much like the recent secret $3.9 billion deal Apple recently revealed it made with component suppliers.
Bernstein Research analyst Toni Sacconaghi met last week with Cook, Apple Chief Financial Officer Peter Oppenheimer, and Vice President of Online Services Eddy Cue. According to Forbes, the analyst came away with the impression that Apple is "likely to develop lower priced offerings" in its handset business.
Cook also reportedly said that Apple is planning "clever things" to compete in the prepaid handset market. He also said that Apple is "not ceding any market," and the company doesn't want its products to be "just for the rich."
Cook's comments, and the analyst's interpretations, come soon after two prominent publications claimed that Apple is working on a new, smaller, $200 contract-free iPhone that it could sell directly to customers and bypass wireless carrier contracts. Both Bloomberg and The Wall Street Journal said that Apple's alleged plans were in an effort to compete with Google's growing Android mobile platform.
But another mainstream publication, The New York Times, rebuffed those two reports only days later, and said that Apple is not developing a smaller handset. However, it was reported by the Times that Apple has explored opportunities to create a less expensive iPhone.
In his meeting with Sacconaghi, cook reportedly referred to the iPhone as "the mother of all halos," as the handset has expanded sales of Apple's other devices, particularly in emerging markets. Apple has long referred to sales of the iPod -- and later iPhone -- as having a "halo effect" that drives sales of Macs.
And one emerging market where Apple has found great success in a short period of time is China. Cook reportedly acknowledged that Apple has spent "huge energy" in China, and also noted that it is a "classic prepaid market," which would be an ideal candidate for a cheaper iPhone.
The company is also said to be looking to expand its carrier partnerships. Oppenheimer said that Apple has 175 carrier partners, while rival Research in Motion, maker of the Blackberry, partners with 550 carriers.
Cook also said he believes the tablet market will eventually be bigger than the PC market, and that competition for tablets will be even more intense than with smartphones. He also hinted that the company has interesting new things in its product pipeline.
Finally, Oppenheimer also said that Apple's current capital structure is not efficient. He said the company is likely to use its cash to secure supplies of key components, much like the recent secret $3.9 billion deal Apple recently revealed it made with component suppliers.
Comments
IMO the only way an iPhone nano makes sense is if there is a wifi only option, or a data plan that is month to month like the iPad.
In order to do this there would be no need for a different form factor at all, and this should make everyone (besides the carriers) happy.
It's not "for the rich". It's for those that value their time more than folks that have the innate need to micro-manage, and system-integrate their lives.
Its for people who value their time and have more money than most. Even Apple say that.
On another note, it is good to see that Apple recognizes that hanging on to all that cash is not delivering much value to the company or its shareholders. Prepaying for components is an excellent use of the money although it will probably just increase future gross margins and free cash flow due to discounts afforded Apple. I still think they have plans for a major play.
This recession has really kicked me in the nuts.
It's not "for the rich". It's for those that value their time more than folks that have the innate need to micro-manage, and system-integrate their lives.
It's also for people like my mom who surely don't care about micro-managing or system integrating, but do care about a great looking, easy to use, and fun phone
I still think they have plans for a major play.
I agree. Any suggestions for them?
IMO the only way an iPhone nano makes sense is if there is a wifi only option, or a data plan that is month to month like the iPad.
Which may be exactly what they have planned. I am surprised Google hasn't gone this route because they already have the VOIP software in place. Dump the cell phone network, stick with wifi.
-kpluck
It's not "for the rich". It's for those that value their time more than folks that have the innate need to micro-manage, and system-integrate their lives.
Well, I think the price difference between an iPhone 4 and an iPod touch clearly shows that the iPhone is for those with disposable income and looser wallets and the iPod touch is for the more budget-minded customer.
Prices in Germany, in Apple's own online store (include 19% VAT, prices similar elsewhere in Europe):
- iPhone 4 32 GB, contract-free, unlocked: ?739
- iPod touch 32 GB: ?299
Yes, the iPhone has a better screen (viewing angle), a cellphone radio and more expensive case but this is Apple clearly segmenting the market and offering similar products to different audiences.
While the iPhone nano makes a lot of sense to me, the cost of the phone is not the problem but the data charges that go with a smart phone. And because I find it very unlikely apple is going to release a phone without the appstore ecosystem, this rumor is hard to believe.
IMO the only way an iPhone nano makes sense is if there is a wifi only option, or a data plan that is month to month like the iPad.
In order to do this there would be no need for a different form factor at all, and this should make everyone (besides the carriers) happy.
I disagree. If the carriers aren't getting their $30/month data fees, that means lower subsidies, and therefore, higher intitial costs if you don't change the hardware (barring gutting the iPhone and selling a mostly empty shell). Or do you really think an iPhone only costs $200?
So if the goal is to provide a cheaper option for customers, and if the carriers don't provide as much subsidy due to lack of data fees, then the phone itself needs to be much cheaper.
Apple demonstrated it's willingness to make a touch device that doesn't have ties to wireless data or the app store when it made the iPod nano.
IMO the only way an iPhone nano makes sense is if there is a wifi only option, or a data plan that is month to month like the iPad.
Isn't the WiFi-only iPhone already here with the iPod touch? And vastly cheaper than an iPhone (?739 vs. ?299)?
But it sure won't be $200.
Which may be exactly what they have planned. I am surprised Google hasn't gone this route because they already have the VOIP software in place. Dump the cell phone network, stick with wifi.
-kpluck
You're right. There has to be a big hurdle, otherwise they would have already done it. Obvious guess: Carriers don't want to subsidize a "smart" phone without a 2 yr. data contract.
Therefore Apple needs to come up with a slick solution to make everyone happy. This is where a slightly underpowered iPhone nano that can be sold for an unsubsidized price that consumers can stomach and still allows Apple to keep their margins makes the most sense right now.
I would definitely buy a cheaper contract-free iPhone nano. I've stuck to my free phone + iPod Touch combination because I haven't wanted to pay for a data plan and I couldn't justify buying an unlocked iPhone.
You don't want to pay for the data plan because the data plan pays for the ~$500 subsidy. As long as contract-free iPhones cost more than twice than equivalent iPod touches, the data plan itself is only part of the problem, the bigger problem might be the huge subsidy these data plans are financing.
An ipod touch with just a 3G data plan like you can get on an ipad would be perfect for me.
But i'm just not paying $70/month for a phone. I have a VOIP $15/month phone at home. I have a phone at work. I don't have a huge need for a phone in between those two places.
In his meeting with Sacconaghi, cook reportedly referred to the iPhone as
Was it cook from our ship?