John Sculley says Apple needs cheap iPhone for emerging smartphone markets

Posted:
in General Discussion edited January 2014
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.
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Comments

  • Reply 1 of 143
    richlrichl Posts: 2,213member


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

  • Reply 2 of 143
    Why listen to anything this clown has to say?
  • Reply 3 of 143
    philboogiephilboogie Posts: 7,438member
    "The next we want your opinion Mr. Sculley, we'll give it to you."
    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.
    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.
    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?
  • Reply 4 of 143
    jb510jb510 Posts: 124member


    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.

  • Reply 5 of 143
    buzzzbuzzz Posts: 84member
    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.
  • Reply 6 of 143
    apple ][apple ][ Posts: 8,572member


    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.

  • Reply 7 of 143


    He took AAPL to almost chapter 11

  • Reply 8 of 143
    drblankdrblank Posts: 3,383member
    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.
  • Reply 9 of 143


    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.

  • Reply 10 of 143
    I think he wants back in.
  • Reply 11 of 143


    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.

  • Reply 12 of 143
    @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 ;-)
  • Reply 13 of 143

    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.

  • Reply 14 of 143
    What a tool...
  • Reply 15 of 143


    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>

  • Reply 16 of 143


    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. 

  • Reply 17 of 143


    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.

  • Reply 18 of 143
    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.
  • Reply 19 of 143


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

  • Reply 20 of 143
    asciiascii Posts: 5,941member


    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.

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