Apple CEO Tim Cook on cheap smartphones: 'We're not in the junk business'
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.
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."
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."
Comments
Especially the quote in the articles' title.
Did Bloomberg use Flash for this pic:
Counting 3,2,1 for all the trolls to show up with all the ways Apple doesn't care.
Reminds me of Steve. "We don't ship junk."
Yeah, f*ck you Samsung.
Standing ovation for Mr Cook.
Take that, Samsung!
Ya gotta stick to your core. I'm glad to hear Tim say that that's exactly what they are doing.
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.
Ive has taken the Copyrights from Steve Jobs to use this sentence very often.
This sentence is his signature now.
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.
[IMG]http://i43.tinypic.com/11cavxg.jpg[/IMG]
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.
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.
Trolls are coming!
"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.
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.
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."