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Phil Schiller says Apple would never make a 'cheap' iPhone

post #1 of 194
Thread Starter 
When asked about the possibility of a low-cost iPhone, Apple marketing chief Phil Schiller said his company is not interested in making cheap, low-profit products.

Schiller's comments, made to the Shanghai Evening News, are of course not a guarantee that Apple will not make a rumored low-cost iPhone. The company famously panned smaller, less expensive tablets before releasing the iPad mini last October.

The interview with Schiller, which was confirmed by Apple to The Next Web, came in response to recent reports claiming that Apple wants to release a cheaper contract-free iPhone this year. Such a device is said to be geared toward emerging markets like China, which Schiller visited this week along with Apple CEO Tim Cook.

Schiller said that basic "feature" phones were initially popular in the Chinese market, while "cheap" smartphones are currently the most successful. But he said Apple wouldn't go down that same path.

iPhone5


"Despite the popularity of cheap smartphones, this will never be the future of Apple's products," he said. "In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit."

One estimate issued on Thursday suggested that about 65 percent of the current smartphone market is comprised of smaller, less expensive handsets popular in China and Brazil. Gene Munster of Piper Jaffray believes a low-cost iPhone would allow Apple to address that market and generate $6.5 billion in revenue at the end of 2013 alone.

Rumors of a less expensive iPhone geared toward emerging markets picked up steam this week, when The Wall Street Journal said Apple is working on a new handset that could hit the market as soon as this year. It was said that Apple's interest was in response to growth of Android handsets in the low-end market.

Rumors of a less expensive iPhone model to be sold contract free are not new. But to date, Apple has instead opted to keep around previous years' models and sell them at a lower price.

Still, Apple's least expensive iPhone is the iPhone 4, first released in 2010, which sells for $450 without a service contract in the U.S. That same device costs $490 in China and $750 in Brazil when taxes are added.
post #2 of 194
Damn straight, Phil.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #3 of 194

I don't get it.  People have been saying that Apple neeeeeeeds to make a cheap iPhone since 2008.  Meanwhile, the strength of iPhone sales just increased.  When are people going to realize the Apple way isn't the traditional way, but it works.

post #4 of 194

EFF YES. You tell 'em, Phil.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
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Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #5 of 194

I still see "we don't ship junk" is still in effect at Apple. 

 

:)

post #6 of 194
Well maybe now after Schiller's statement, the rumour mill concerning this subject will stop! A cheap, plastic 5" iPhone just doesn't make any sense for Apple the brand.
post #7 of 194

""In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit.""

 

Follow the money.

post #8 of 194
Once again Gene Munster Wrong. This time Apple exec has downplayed his rumors of a cheaper IPhone Hopefully soon the SEC follows up on the market manipulation.
post #9 of 194
Quote:
Originally Posted by 2oh1 View Post

I don't get it.  People have been saying that Apple neeeeeeeds to make a cheap iPhone since 2008.  Meanwhile, the strength of iPhone sales just increased.  When are people going to realize the Apple way isn't the traditional way, but it works.

Apple needs a cheap iphone just like it needed a netbook. Analysts never learn.
post #10 of 194
Quote:
Originally Posted by AppleInsider View Post

"Despite the popularity of cheap smartphones, this will never be the future of Apple's products," he said. "In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit."

I think this is what someone in another thread called "getting mauled" in phones.
post #11 of 194
Quote:
Originally Posted by GadgetCanada View Post

SJ also said a smaller tablet form factor doesn't make sense (sanding fingers etc.) yet the iPad mini was made and is selling like crazy. I'm not a business analyst so I have no idea if a cheap iPhone is a smart business move or not but I'm sure they would sell tens of millions. I really don't see the problem of giving users a choice of a premium iPhone or a cheap iPhone. Doesn't bother me at all.

 

Complete garbage.

 

The tablets SJ was talking about were the 16:9 7" variety like the Nexus 7 and smaller kindle.

 

The iPad Mini is a 4:3 7.9" tablet that has 34% more screen area than the 16:9 7"ers.  34% is immediately noticeable when you hold them side by side.  

post #12 of 194

Seriously, though - who are you going to believe?  Some guy who works for Apple, or Gene Munster.  My money is on Gene!

 

 

oh, and

 

/s

post #13 of 194
The rumors like the cheaper iPhone are, plain and simple, are others attempts to manipulate stock prices in the market for micro and day traders..

The stock market is a joke. It's about starting misleading rumors now as the expense of others for personal interest/profit. Its middle/high-school all over again. Is this what our US consumerism has come to? Who can we trick and rip-off next? Ethics? Morals? Not here in the US of A.. not for some time.

We're seeing way to much of this.
post #14 of 194

End of story.

 

PS: Shout-out to gatorguy for originally posting this piece of news!

post #15 of 194
Quote:
Originally Posted by GadgetCanada View Post

SJ also said a smaller tablet form factor doesn't make sense (sanding fingers etc.) yet the iPad mini was made and is selling like crazy. I'm not a business analyst so I have no idea if a cheap iPhone is a smart business move or not but I'm sure they would sell tens of millions. I really don't see the problem of giving users a choice of a premium iPhone or a cheap iPhone. Doesn't bother me at all.

they went to quite a bit of effort to suggest that the iPad mini was significantly bigger than the other 7" tablets, though.

post #16 of 194
Am I the only Apple lover who is worried by this news? It wasn't that long ago that Apple had 50 percent of the smart phone market. What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds? Should we continue to be thrilled?
post #17 of 194
Originally Posted by Slicksim View Post
It wasn't that long ago that Apple had 50 percent of the smart phone market.

 

This never happened.


What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds?

 

What leads you to believe they'd make less money, what leads you to believe they're going to lose marketshare, what leads you to believe developers would ever go anywhere else, and what leads you to believe that iAds makes them any meaningful money?

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #18 of 194
why the hell would Apple even risk cannibalizing their high cost swag for some cheap sh**!
It would mean a point of no dam return.
post #19 of 194
Notice what he didn't say. He didn't say "Cheaper" and the stock price rises, this tells me that investors were selling based somewhat on prospect of less margins. now that this rumor has been squashed back to normal margin forecasts.

Originally Posted by Rickers - 2014

Cook & Co will bury Apple.  They can only ride Steve's ghost for so long.  Steve == Apple and Apple == Steve.  

Reply

Originally Posted by Rickers - 2014

Cook & Co will bury Apple.  They can only ride Steve's ghost for so long.  Steve == Apple and Apple == Steve.  

Reply
post #20 of 194
Quote:
 "In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit."

 That is all that matters, but yet again Wall Street will award the 80% who are fighting over the 25% profits. It makes no sense why Wall Street likes high market share at low margins.

post #21 of 194

I think it's about corporate focus. Once you start down that path, you decide making cheaper everything is a place to be. Your sales people get that in them, your engineers decide things can be cheaper, not better. It's a corporate strategy and philosophy. It's not dissimilar to the automotive industry. As long as you are profitable Apple has a very viable POV. Let the other 30 companies fight tooth and nail for the last 30% of the market. 

post #22 of 194
Quote:
Originally Posted by AppleInsider View Post

... Schiller's comments, made to the Shanghai Evening News, are of course not a guarantee that Apple will make a rumored low-cost iPhone. ...

 

typo.

post #23 of 194
Quote:
Originally Posted by 1983 View Post

Well maybe now after Schiller's statement, the rumour mill concerning this subject will stop! A cheap, plastic 5" iPhone just doesn't make any sense for Apple the brand.
The rumor mill is just getting started. Notice how Phil carefully phrased his response ...

He did not say Apple will not make a less expensive iPhone, he just said they won't make a cheap one. He confirmed that's not how Apple does things.

But there will be a less-expensive iPhone mini. Guaranteed.
post #24 of 194
Originally Posted by Mac_128 View Post
But there will be a less-expensive iPhone mini. Guaranteed.

 

0% guarantee. 

 

If Apple actually made everything they said they weren't, they'd be bankrupt by now.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #25 of 194

It's good that somebody has sense at least!

 

All of these clueless analysts and other people who presume to know what's best for Apple should just STFU. Apple decides what they're going to make next, not some clueless analysts and other asshats who often have ulterior motives.

 

It seems to me that Apple has always been about making kick ass devices and amazing software. I didn't know that Apple should be in the business of catering to every demographic and meeting every cheap price point in the entire world, including people who probably walk around barefoot all year, because they don't own a pair of shoes.

 

What's next, should Apple release a special welfare edition iPhone? After all, the number of people currently on welfare in the USA represents a huge market, millions and millions of customers! Think of all of the market share that Apple could add, because that's all that counts right? Never mind that Apple would be making no profit at all on their cheap phone, just think of the market share!

 

No, Apple should just keep doing what it's been doing for decades. That is to say, keep releasing kick ass products, and those people who want it and can afford it will buy it. Those who can't, well they won't. Go buy something else, and please don't come to any Apple forums and whine about the price, because your kind is unwanted. Apple isn't going to ship any cheap junk. That market is already crowded and well covered by other companies, so stop asking Apple to abandon all of it's core principles and make some cheap junk.

post #26 of 194
It wasn't that long ago that Apple was the new boy in the music player market. They started with the top end iPod, and soon followed this up with music players at a range of price points, and cleaned up in the music player market to the point that iPod became the generic term for the category. I don't remember people being so uptight about cannibalising sales or the slide into cheep, so why now ?
post #27 of 194
Quote:
Originally Posted by Slicksim View Post

Am I the only Apple lover who is worried by this news? It wasn't that long ago that Apple had 50 percent of the smart phone market. What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds? Should we continue to be thrilled?

Hmmm.... AAPL was trading at ±$0 the whole day; after news of Schiller's comments, it's up $7+......

 

I think I'll take the market's analysis over yours.

post #28 of 194
Quote:
Originally Posted by Slicksim View Post

Am I the only Apple lover who is worried by this news? It wasn't that long ago that Apple had 50 percent of the smart phone market. What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds? Should we continue to be thrilled?

iOS is more than the iPhone, it's iPhone, iPod touch, iPad and in the future MacBook and iMac. If you can develop for 800 million users no one complains about 10 percent.

J.
Edited by jnjnjn - 1/10/13 at 12:58pm
post #29 of 194
Quote:
Originally Posted by Slicksim View Post

It wasn't that long ago that Apple was the new boy in the music player market. They started with the top end iPod, and soon followed this up with music players at a range of price points, and cleaned up in the music player market to the point that iPod became the generic term for the category. I don't remember people being so uptight about cannibalising sales or the slide into cheep, so why now ?

There was no sacrifice of margins then.

 

Read the story about Munster's analysis carefully.

 

Hence why, now.

post #30 of 194
Here's a hint: call it a "simpler" iPhone NOT a CHEAPER one!

"Simpler" still has implied quality, "cheaper", doesn't.

Note both terms can cost the same and have the same margins.....

Like the mini, not a "lesser" iPad, just a DIFFERENT one. Can we say Shuffle, Nano, Air, Macbook etc.? Yes we can.

Could they screw it up? Sure. But then again they don't have to do they?
post #31 of 194
Quote:
Originally Posted by Slicksim View Post

Am I the only Apple lover who is worried by this news? It wasn't that long ago that Apple had 50 percent of the smart phone market. What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds? Should we continue to be thrilled?

I agree, High-margin profit isn't everything.  I've said this in several other threads this week.

You can make all the profit in the world, but with smaller adoption rates you loose regardless of how much money you've made.

That being said, it's been shown in many articles that iPhone users generate a majority of mobile use/web traffic.  So Apple certainly hasn't got a lot to worry about...YET.  But I am worried every time I see the market share dropping.

post #32 of 194
Quote:
Originally Posted by jfc1138 View Post

Here's a hint: call it a "simpler" iPhone NOT a CHEAPER one!

"Simpler" still has implied quality, "cheaper", doesn't.

Note both terms can cost the same and have the same margins.....

Like the mini, not a "lesser" iPad, just a DIFFERENT one. Can we say Shuffle, Nano, Air, Macbook etc.? Yes we can.

Could they screw it up? Sure. But then again they don't have to do they?

That seems to be the crux of the matter.

 

People hear/read "Cheaper" and equate that with build-quality.

Cheaper doesn't have to mean lesser quality.

 

Funny how words make such a difference.

 

I like to use "less expensive" or "lower priced" iPhone, but "simpler" is another good one.  However, that implies that a "simpler" iPhone will have fewer features, which I don't think the cost savings would come from making the UI or OS simpler.


Edited by antkm1 - 1/10/13 at 12:48pm
post #33 of 194
Originally Posted by jfc1138 View Post
Here's a hint: call it a "simpler" iPhone NOT a CHEAPER one! "Simpler" still has implied quality, "cheaper", doesn't.

 

"Simpler" implies removal of key features. I don't like this trend of Apple releasing "new" devices that are just two year old hardware in a new case.

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #34 of 194
Originally Posted by Slicksim
It wasn't that long ago that Apple had 50 percent of the smart phone market.

"This never happened."

Did I get that wrong? I thought I read that Apple had more than half of US smart phone sales?
post #35 of 194
Quote:
Originally Posted by Tallest Skil View Post

 

This never happened.

 

What leads you to believe they'd make less money, what leads you to believe they're going to lose marketshare, what leads you to believe developers would ever go anywhere else, and what leads you to believe that iAds makes them any meaningful money?

for the same reasons you think the opposite is true.

post #36 of 194
Originally Posted by antkm1 View Post
for the same reasons you think the opposite is true.

 

But they're only gaining money, marketshare and developers with their current strategy…

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply

Originally Posted by helia

I can break your arm if I apply enough force, but in normal handshaking this won't happen ever.
Reply
post #37 of 194
Quote:
Originally Posted by Tallest Skil View Post

 

But they're only gaining money, marketshare and developers with their current strategy…

I wouldn't say they're "gaining" market share.  Have you been reading the headlines this past week or two?

Addition: They may be selling more iPhones than last year, but the % they've gained is less that that of the Android market.  And they gained a heck of a lot more than Apple.

 

New customers to Android, whereas Apple's are very likely just upgrades.

Android and Apple both have gained this year, but that's just because the market is nearing saturation, IMO.

post #38 of 194
Quote:
Originally Posted by jfc1138 View Post

Here's a hint: call it a "simpler" iPhone NOT a CHEAPER one!

"Simpler" still has implied quality, "cheaper", doesn't.

 

Agreed. 

 

Personally, I think Apple will enter the feature phone market.

 

Been writing my thoughts on it... http://www.obviouslogic.com:8080/opinions/iphone-nano.php

Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
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Disclaimer: The things I say are merely my own personal opinion and may or may not be based on facts. At certain points in any discussion, sarcasm may ensue.
Reply
post #39 of 194
Quote:
Originally Posted by Slicksim View Post

Am I the only Apple lover who is worried by this news? It wasn't that long ago that Apple had 50 percent of the smart phone market. What happens when Apple has 50 percent of the profits and 10 percent of the market and App developers go else where and no one is using iAds? Should we continue to be thrilled?

 

Could you provide a link or something that shows that Apple EVER had 50 percent of the smartphone market. They do right now in the U.S. but worldwide they have never been anywhere near 50%.

post #40 of 194

There is a difference between "cheap" and "low cost." Cheap implies low quality. So, his statement is meaningless. Apple could very well come up with an iPad Mini like lower cost iPhone to address the prepaid and no contract markets. 

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