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John Sculley says Apple needs cheap iPhone for emerging smartphone markets

post #1 of 131
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In an interview with Bloomberg Television late Tuesday, former Apple CEO John Sculley said the company needs to focus on creating a variant of its iPhone tailored to emerging markets if it wants to grow, as developed regions are becoming saturated with the smartphone.

John Sculley
Former Apple CEO John Sculley.


Speaking with Bloomberg Television from Singapore, Sculley said Apple needs to adapt to a "very different world" in which smartphones are selling at increasingly low prices.

?As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you?ve got to dramatically rethink the supply chain and how you can make these products and do it profitably," Sculley said.

The former Apple chief's statements come amid reports that the Cupertino, Calif., company has drawn down orders from iPhone parts suppliers, though market analysts have yet to agree on how significant the cuts are or what they mean. There are also rumors floating that Apple is preparing to release a low-cost iPhone model before the year is out.

Sculley also suggested that handsets from rival manufacturers are catching up to Apple in terms of innovation. He pointed out that the differences between the iPhone and a model from a competitor like Samsung have decreased to a point where the two are nearly on equal footing.

?Samsung is an extraordinarily good competitor,? Sculley said. ?The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.?

In November, research firm Gartner found that Apple's share of worldwide mobile device sales rose to 5.5 percent in the third quarter of 2012. While the iPhone maker took the third spot overall, it trailed far behind the world's top two manufacturers, Samsung and Nokia, which had a respective 22.9 percent and 19.2 percent share of the market. As far as smartphone sales go, however, Apple and Samsung lead the world with a combined market share of 46.5 percent.

While Sculley's comments were somewhat critical, he said that current Apple CEO Tim Cook is ?exactly the right leader? for the company due to his extensive background in supply chain logistics.
post #2 of 131

He's the former CEO of Apple for a reason. 

post #3 of 131
Why listen to anything this clown has to say?
post #4 of 131
"The next we want your opinion Mr. Sculley, we'll give it to you."
Quote:
Originally Posted by AppleInsider View Post

As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you've got to dramatically rethink the supply chain and how you can make these products and do it profitably," Sculley said.

I think with Tim Cook's experience they have this covered.
Quote:
While Sculley's comments were somewhat critical, he said that current Apple CEO Tim Cook is ?exactly the right leader? for the company due to his extensive background in supply chain logistics.

Ah, ok, he figured this out while talking. 'Kay.
Quote:
Samsung is an extraordinarily good competitor, Sculley said. The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.

Of course it isn't a world of difference anymore. Samsung copied more and more; what did you expect?
Edited by PhilBoogie - 1/15/13 at 11:46pm
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post #5 of 131

I think everyone is overlooking a market equally important to "emerging markets"...  kids...

 

More and more kids 12-16 are getting phones, and most parents don't want to put $600 devices in their hands.  This is also about producing a new gateway drug.

post #6 of 131
John Sculley presided over the worse period of Apple's history, so anything he has to say, as far as I am concerned, is not even worth repeating.
post #7 of 131

Apparently, everybody's an expert and they all have an opinion about what exactly Apple should do nowadays. I'm no expert, but you're damn right that I have an opinion too.

 

He was ultimately forced out of Apple in 1993 as the company's margins eroded, sales diminished and stock declined.[4]

 

Yeah, Apple should definitely listen to him and make a low margin iPhone so that we all can watch the stock further decline.

 

He's basically saying that Apple should join in on the race to the bottom. Just because somebody else sells a product for $5, does that mean that you should also? If some idiot jumps off of a bridge, should you also jump?

 

Meanwhile, Apple can't even keep up with demand on many of it's current product lines. People who paid thousands for a new iMac (27") have around a month's wait. Clearly, the smart thing to do is to introduce yet another product line, a very low margin product that will have to be produced in the tens of millions. And where exactly are these "emerging markets" that certain people hint about, and who are the customers, and are they even worth having as customers, from a business perspective? Who cares about the developing world the third world? A 99 cent app is probably too expensive for those markets. And if this is to be a cheap prepaid phone, then where is the profit supposed to come from? 

 

Apple currently has very nice margins on most of it's products, and yet, much of Wall Street is not impressed and doesn't like Apple. I can just imagine how impressed "Wall Street" will be when Apple's margins shrink to 1/2 or 1/3 of what they currently are, because they're selling some super cheap phone. I can already see the headlines and comments from "analysts" and other geniuses.

 

There comes a point where you can't make a product under a certain price point, and still expect to get the same quality, features and superior build that people have come to expect from the Apple brand. Maybe Apple can do a spinoff brand, so that all of the people who speak about ghetto markets emerging markets will be happy, while hopefully Apple doesn't erode their own brand too much in the process.


Edited by Apple ][ - 1/16/13 at 12:31am
post #8 of 131

He was booted from AAPL

He took AAPL to almost chapter 11

post #9 of 131
hey Sculley,

YOU'RE FIRED and are NOT coming back to Apple. Apple already has older gen iPhones that are sold to emerging markets as low cost iPhones. When the next iPhone release comes out then they'll be in a position to drop the price of the iPhone 5 and that will then be a lower cost phone.

Sculley, remember, YOU SUCKED AS A CEO FOR APPLE SO MOVE ALONG.
post #10 of 131

Sculley still doesn't get what his biggest mistake was at Apple: commoditization. He thought "market" and "money"—Jobs thought "killer products". Sculley, during his stint at Apple, commoditized the golden eggs and killed the hen who laid them. Even though in the past he has admitted that being a marketer is what did him in at Apple, he cannot help himself—he keeps thinking that way.

post #11 of 131
I think he wants back in.

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"Apple should pull the plug on the iPhone."

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post #12 of 131

Thank you Sculley!

 

Here is Apple's cue to do the exact opposite of any thing John Sculley says about Technology, it's designs, prices and target markets.

post #13 of 131
@jamesman: exactly. Sculley did not think in terms of customer value add, creating markets and profit etc but in terms of mass and revenue.

@suddenly newton: I thonk can want all he wants ;-)
Yeah, well, you know, that's just, like, my opinion, man.
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Yeah, well, you know, that's just, like, my opinion, man.
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post #14 of 131
Quote:
Originally Posted by Suddenly Newton View Post

I think he wants back in.

 

Good for him. He's despised by anyone with clout inside Apple and was truly despised and betrayed Steven P. Jobs whose entire legacy assures Sculley can come and watch a presentation or visit the unveiling of an Apple store, but that's it.

post #15 of 131
What a tool...
post #16 of 131

Gee, Mr. Sculley, what a great idea! Apple could do what you had it do before: build a cheap, plastic model in different versions for different emerging markets with designations like 475 for South America, 578 for Africa, 6100 for Asia, etc. And of course there would have to be a new name to differentiate it from the high end iPhone. How about Performa Phone ! Nothing like using one of your ideas with a proven track record, eh ¿

 

 

 

 

 

</sarcasm>

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post #17 of 131

What I am wondering is what features would this "cheaper" iphone have that the more "expensive" one would not have? What advantages would it have for Apple and for the people who would buy it? 

 

Apple is not a commodity/handset maker! This strategy is good for companies like RIM who are struggling and every little helps them. 

post #18 of 131

Why would anyone listen to John Skulley.  He ran Apple in the ground the first time he was CEO and was a back stabber to to the guy who hired him.  Apple should stay the course and follow the path set by Steve Jobs and Tim Cook - they seem to have a vision.  Skully needs to go back to suger water.

post #19 of 131
Why would anyone listen to this loser? He presided over the darkest days at Apple and fired the vision that started the company. I have no interest in his opinions. On anything.
NW '98
"Everything works, in theory..."
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NW '98
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post #20 of 131

I'm more interested in what Gil Amelio has to say...

post #21 of 131

If by emerging markets he is referring to Asia, I think people in many parts of Asia are quite image conscious and would rather buy the best iPhone even if it's slightly more than they can really afford. If anything Apple should try and make themselves appear *more* exclusive and elite.

post #22 of 131
I do see what he's saying - that Apple needs to find a foothold in the emerging markets before Samsung or someone else completley takes over. I'm sure Cook and Co. have been thinking about what they can do in markets that are heavily pre-paid where people can't afford to spend $500 on a phone. I think the rumors of a cheap, plastic phone are ridiculous but I don't doubt Apple has been thinking about what they can do in this space that's not cheaper in quality but price. I don't see this as joining in a race to the bottom but rather trying to hook people into your platform/ecosystem who in the future might be able to afford more expensive products.
post #23 of 131
Quote:
Originally Posted by ascii View Post

If by emerging markets he is referring to Asia, I think people in many parts of Asia are quite image conscious and would rather buy the best iPhone even if it's slightly more than they can really afford. If anything Apple should try and make themselves appear *more* exclusive and elite.
With the mini I think Apple has shown you can make a high quality product that isn't super expensive. I'm sure they could do the same thing in the phone space. I'm curious if this applies to India too as I don't think Apple has huge penetration there.

I don't here a lot or people talking about Europe but it makes me want to vomit when I hear that Galaxy is the phone of choice in a lot of European countries. I guess all that Samsung marketing/brainwashing worked. What can Apple so to turn it around in Europe?
post #24 of 131

Sculley should have stuck to selling sugar water

post #25 of 131

John Sculley has never known what Apple needs.

post #26 of 131
Quote:
Originally Posted by Technarchy View Post

I'm more interested in what Gil Amelio has to say...

 

You have to give Gil at least a little credit for saving Apple. He did pay NeXT to acquire Apple, and afterward, if he had had any clue what he was doing and been able to hang on to his job, things might have been very different.

post #27 of 131

Why is everyone talking about cheaper or larger phones being a necessity for Apple?

 

Very simply, it is because these folks are pundits. They have limited imagination which led them to write things like "Apple trailed others in innovating in the smaller tablet form factor." They can only write and talk about what they see. If making a smaller tablet is a significant innovation to them, is it any wonder they see a cheaper or larger phone (hey how about a cheaper AND larger phone) being the next Apple blockbuster?

 

I do see Apple possibly making a larger and/or cheaper phone. But as mentioned before, there will be a reason for Apple to make this, and a reason for consumers to buy it, beyond the fact that it is cheaper and larger. After all, the iPad Mini is NOT just like every other 7-8" tablet.

post #28 of 131
Quote:
Originally Posted by Takeo View Post

Sculley should have stuck to selling sugar water

That's aspartame water to you.

post #29 of 131
Quote:
Originally Posted by Technarchy View Post

I'm more interested in what Gil Amelio has to say...

Me too. At least he didn't totally, completely suck as CEO (not quite).


Edited by MacManFelix - 1/16/13 at 5:17am
post #30 of 131

Apple doesn't need to grow or compete in every market any more than Mercedes, BMW or Audi—or any number of other companies you could name—whose products are higher quality and more expensive than average. There is always a market for people who realize that a quality tool saves money over the long term, and tremendous frustration in the short term. Plenty of companies make cheap crap for everyone else.

post #31 of 131

I'm sure Apple would love to introduce a cheap model because of the importance of locking people into the IOS ecosystem as early as possible, but I believe what's holding them back is fear of cannibalising the rest of their product line.

I think the answer is to have a two tier product line - cheaper plastic products where they aren't afraid to be expressive and innovative (a return to the spirit of the original Imac) then the more serious prosumer products that they currently do. Good design doesn't have to be expensive - and they must have plenty of insanely great young designers there who are currently stifled into designing bland rounded-rectangle minimalist boxes.
 

post #32 of 131
"he said that current Apple CEO Tim Cook is %u201Cexactly the right leader%u201D for the company due to his extensive background in supply chain logistics"

Someone batter tell Mr Sculley that Apple isn't a "supply chain logistics" company. Its a computer / Software / Consumer electronics company!

As such, it needs a creative and inventive leader like Jobs, not a number crunching executive with an economics degree, that's totally detached from the popular culture he is supposed to be directing the company into producing goods & services for!
post #33 of 131

Sculley go home!

post #34 of 131
Quote:
Originally Posted by jb510 View Post

I think everyone is overlooking a market equally important to "emerging markets"...  kids...

More and more kids 12-16 are getting phones, and most parents don't want to put $600 devices in their hands.  This is also about producing a new gateway drug.

This is a good argument for a cheaper iPhone. I personally would love to see Apple completely replace all iPod touches with a cheaper than 5S iPhone.
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post #35 of 131
Let's remember the terrible decisions he made at Apple.

- There were more Apple models on sale which lead to consumer confusion. I remember a shitty low price model at "The Wiz" electronic store.

- He hampered the Newton development team because the Powerbook team was scared of it's sales being cannibalize.

- Like Microsoft, he allowed the various teams at Apple to turn on each other.

- Doesn't have the balls to make a risky decision!
post #36 of 131
Quote:
Originally Posted by ascii View Post

If by emerging markets he is referring to Asia, I think people in many parts of Asia are quite image conscious and would rather buy the best iPhone even if it's slightly more than they can really afford. If anything Apple should try and make themselves appear *more* exclusive and elite.

Spot on.
post #37 of 131

How is THIS not an already available CHEAP iPhone?

 

post #38 of 131

This is the fellow who almost drove Apple into the ground. And here he shows the thinking that did it. Apple has never chased the market. It makes new markets for its ground breaking amazing insanely great stuff. Sculley never got that. Typical bean counter mentality.


Edited by greenie12 - 1/16/13 at 6:05am
post #39 of 131
OMG . John Scully comments on Apple? .. enough said. I never believed the Knowledge Navigator was his idea either.
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post #40 of 131

"How is THIS not an already available CHEAP iPhone?"

 

You should have included what the "**" refers to. maybe on a NEW 2YR contract? which is not good for PAYG customers

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