Apple CEO Tim Cook on cheap smartphones: 'We're not in the junk business'

Posted:
in iPhone edited January 2014
Facing criticism over higher-than-expected pricing of the new iPhone 5c, Apple Chief Executive Tim Cook has defended his company's strategy, saying there's plenty of room to grow ? and retain its profits ??in the high-end handset market.

Bloomberg
Apple executives Craig Federighi, Tim Cook, and Jony Ive. Source: Bloomberg Businessweek.


Following the introduction of his company's mid-range iPhone 5c and flagship iPhone 5s, Cook was joined by Apple design chief Jony Ive and software head Craig Federighi in speaking with Bloomberg for its latest cover story. The three executives exude confidence in the interview, with Cook saying that his company's share price doesn't affect his mood.

Apple's CEO noted that the trend toward cheaper electronics is not new, having occurred previously among VCRs, DVD players, cameras, and PCs. Now that it's occurring again with tablets and smartphones, Cook said he doesn't feel compelled to take Apple down that path.

"There's always a large junk part of the market," Cook said. "We're not in the junk business."

Instead, the Apple CEO said he'd prefer to "compete like crazy" for customers who want premium devices that meet their needs. But he won't "lose sleep" over cheaper electronics, because those kinds of devices simply aren't in Apple's DNA.

"Fortunately, both of these markets are so big, and there's so many people that care and want a great experience from their phone or tablet, that Apple can have a really good business," he said.

Prior to its announcement, observers though the iPhone 5c ??Apple's new plastic-backed, multi-colored handset ? might become a more affordable option in the company's smartphone lineup. Analysts presumed that Apple might price the device around $400 without a contract subsidy, helping increase sales in emerging markets like China, India and Brazil.

Instead, the iPhone 5c was introduced as Apple's new mid-range handset, available for $99 with a new two-year service contract, or $549 without a carrier subsidy. That price, along with the fact that Apple did not announce any preorder figures for the iPhone 5c this week, sent the company's stock tumbling.



In response, Cook said his company never had any interest in selling a low-cost iPhone. Instead, he said the purpose of the iPhone 5c is to offer a "great phone and provide a great experience" at a lower cost than the flagship iPhone 5s.

Also featured in the exclusive Bloomberg interview were Federighi and Ive, who revealed that their desks at Apple are a one-minute walk from one another. Both executives were assigned larger roles at the company last year, in a corporate shakeup that was designed to increase collaboration among the company's different departments.

Ive stressed how Apple spends a great deal of time focusing on the smallest of details ? something that consumers appreciate when purchasing a premium product, rather than a cheap alternative.

"I do think that we sense when somebody has cared," Ive said. "And one thing that is incontrovertible is how much we've cared."
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Comments

  • Reply 1 of 185
    It is great to hear Cook et. al discuss strategy.
  • Reply 2 of 185
    Wow! Steve is that you?
  • Reply 3 of 185
    It is great to hear Cook et. al discuss strategy.

    Especially the quote in the articles' title.

    Did Bloomberg use Flash for this pic:

    700
  • Reply 4 of 185
    rogifanrogifan Posts: 10,669member
    Man what a crappy interview. Businessweek has rare access to 3 apple execs and most of the article is about Android. :rolleyes:

    Counting 3,2,1 for all the trolls to show up with all the ways Apple doesn't care. :lol:
  • Reply 5 of 185

    Reminds me of Steve. "We don't ship junk."

  • Reply 6 of 185
    gtrgtr Posts: 3,231member
    "We're not in the junk business."

    Yeah, f*ck you Samsung.

    Standing ovation for Mr Cook.
  • Reply 7 of 185
    rogifanrogifan Posts: 10,669member
    [QUOTE]“We didn’t start opportunistically with 10 bits of technology that we could try to find a use for to add to our features list,” Ive says.[/QUOTE]

    Take that, Samsung! :lol:
  • Reply 8 of 185
    This is the passion I want to see from Tim.
  • Reply 9 of 185
    aaronjaaronj Posts: 1,595member

    Ya gotta stick to your core.  I'm glad to hear Tim say that that's exactly what they are doing.

  • Reply 10 of 185
    richlrichl Posts: 2,213member

    Apple managed to reduce the iPod concept to the super-cheap iPod shuffle. I guess it's a lot easier to do that with a music player than a phone/computer/camera/video player/music player/etc. 

  • Reply 11 of 185
    Quote:


    Ive stressed how Apple spends a great deal of time focusing on the smallest of details


    Ive has taken the Copyrights from Steve Jobs to use this sentence very often. :)  This sentence is his signature now.



     

    Quote:


    "I do think that we sense when somebody has cared," Ive said. "And one thing that is incontrovertible is how much we've cared."


    On seeing these many videos of Jony Ive, I can think how he would have uttered the above line - with his booming voice and shoulders a little down etc. :)

  • Reply 12 of 185
    rogifanrogifan Posts: 10,669member
    Here's the cover pic. Man I'm glad I'm ignoring tech sites this week. I can only imagine the coverage and comments, especially after this article. :lol:

    [IMG]http://i43.tinypic.com/11cavxg.jpg[/IMG]
  • Reply 13 of 185
    wovelwovel Posts: 956member
    richl wrote: »
    Apple managed to reduce the iPod concept to the super-cheap iPod shuffle. I guess it's a lot easier to do that with a music player than a phone/computer/camera/video player/music player/etc. 

    The nano is not super cheap. You can go to any electronics store sand by a small MP3 player for under $10. The nano is simple & small. It does cost a lot less than the touch, but it is moderately priced as an MP3 player.
  • Reply 14 of 185
    wizard69wizard69 Posts: 13,369member
    Hey I care but the fact remains Apple makes a massive profit on each iPhone sold. Right now they basically sell everything they make which means they are under no pressure to adjust prices. That is good for now but being greedy is never perceived well in the long run.

    Here I'm not saying that Apple needs to offer up a dirt cheap limited quality iPhone, rather I'm saying that something like iPhone5c needs to be priced with more reasonable margins. High margins should be reserved for flagship models.

    On the other hand I have just installed iOS 7 on my iPhone 4 and iPad 3 and all I have to say is nice job Apple! ????????????????. Obviously both pieces of hardware are getting on in age but even so performance is not that bad at all. The only problem I have with Apple is that they need to focus on functionality. Many apps got a facelift but not the sort of functionality improvements they need. Looking at Notes in particular and Contacts too. On the other hand moving the text input cursor around has never been this good.

    What I'm trying to say is that iOS and Apples stewardship of the platform is certainly worth a little extra Apple "tax". So better margins than the industry standard is good. However so good that you start to look greedy isn't so good.
  • Reply 15 of 185

    Trolls are coming!

  • Reply 16 of 185
    gtr wrote: »
    "We're not in the junk business."

    Yeah, f*ck you Samsung.

    Standing ovation for Mr Cook.

    700
  • Reply 17 of 185
    wizard69 wrote: »
    Hey I care but the fact remains Apple makes a massive profit on each iPhone sold. Right now they basically sell everything they make which means they are under no pressure to adjust prices. That is good for now but being greedy is never perceived well in the long run.

    Here I'm not saying that Apple needs to offer up a dirt cheap limited quality iPhone, rather I'm saying that something like iPhone5c needs to be priced with more reasonable margins. High margins should be reserved for flagship models.

    On the other hand I have just installed iOS 7 on my iPhone 4 and iPad 3 and all I have to say is nice job Apple! ????????????????. Obviously both pieces of hardware are getting on in age but even so performance is not that bad at all. The only problem I have with Apple is that they need to focus on functionality. Many apps got a facelift but not the sort of functionality improvements they need. Looking at Notes in particular and Contacts too. On the other hand moving the text input cursor around has never been this good.

    What I'm trying to say is that iOS and Apples stewardship of the platform is certainly worth a little extra Apple "tax". So better margins than the industry standard is good. However so good that you start to look greedy isn't so good.

    "High margins should be reserved for flagship models. "

    The problem with that is the flagship model will contain higher cost components, thus offer lower margins if they want to stick with their current price points.
  • Reply 18 of 185
    rogifanrogifan Posts: 10,669member
    wizard69 wrote: »
    Hey I care but the fact remains Apple makes a massive profit on each iPhone sold. Right now they basically sell everything they make which means they are under no pressure to adjust prices. That is good for now but being greedy is never perceived well in the long run.

    Here I'm not saying that Apple needs to offer up a dirt cheap limited quality iPhone, rather I'm saying that something like iPhone5c needs to be priced with more reasonable margins. High margins should be reserved for flagship models.

    On the other hand I have just installed iOS 7 on my iPhone 4 and iPad 3 and all I have to say is nice job Apple! ????????????????. Obviously both pieces of hardware are getting on in age but even so performance is not that bad at all. The only problem I have with Apple is that they need to focus on functionality. Many apps got a facelift but not the sort of functionality improvements they need. Looking at Notes in particular and Contacts too. On the other hand moving the text input cursor around has never been this good.

    What I'm trying to say is that iOS and Apples stewardship of the platform is certainly worth a little extra Apple "tax". So better margins than the industry standard is good. However so good that you start to look greedy isn't so good.
    I agree with you on 5C pricing but at least we're now getting some clarity from Cook. Apple is content with competing in the higher end of the market. We'll see if this continues to be a winning strategy. My guess is Cook figures its impossible to win in a market where its all about price. But I think more than ever Apple will need to demonstrate its value, that its products are worth paying more for. Especially when you have companies that are willing to subsidize hardware in order to get eyeballs.
  • Reply 19 of 185
    wizard69wizard69 Posts: 13,369member
    richl wrote: »
    Apple managed to reduce the iPod concept to the super-cheap iPod shuffle. I guess it's a lot easier to do that with a music player than a phone/computer/camera/video player/music player/etc. 

    Shuffle wasn't super cheap by any means. The problem right now is that Apple basically sells every iPhone made with ease so they aren't in a position to have to address pricing. Times change though.

    Just look at the market for sports and high performance cars, something that was once very profitable for the car companies. That market cooled off considerably to be replaced by the Mini Van and SUV market which later was replaced by the hybrid market. These are all markets where the car companies soaked customers for a long time until trends changed.

    Now the smart phone market isn't the car market, nor do I believe smart phones are a short term trend, but it is easy to get caught with ones pants down. It is clear that Apple doesn't see a short term problem in the smart phone market but people and desires change rapidly. I see Apples move to 64 bit as a way to keep things hot in the market for at least another 5 years. It allows many to dispense with laptops and desktops completely. Eventually though the smart phone market will go the same way the PC market did. PCs got to the point of being good enough so price became a big factor in purchase decisions.
  • Reply 20 of 185
    Quote:

    Originally Posted by RichL View Post

     

    Apple managed to reduce the iPod concept to the super-cheap iPod shuffle. I guess it's a lot easier to do that with a music player than a phone/computer/camera/video player/music player/etc. 


     

     

    The shuffle is cheap because it uses less materials and doesn't have any kind of screen on it, not because they cheaped out on engineering, R&D, design, and materials that aren't as durable as other iPod models. For how small it is, though it really isn't that "cheap."

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