Phil Schiller Says Apple Wouldn't Sacrifice Quality for Market Share in a Cheaper iPhone

[Popeye206]

Yaaaawwwwwn..... So, Phil confirms the obvious. Apple does not do cheap.

I'm guessing they'll just sell the iPhone 4 and 4s as their "cheap" alternative. They already do in other markets so why do something different in China????

[AppleScruff1]

Originally Posted by RolyPolyBird

Metal and plastic are so 2000. Bring on liquid metal!

This.

[KnightWRX]

Originally Posted by AppleGuesser

True. But that doesn't mean Apple should panic and make a budget phone. Short term, yes, stocks may rise. But the image damage I believe would be worse causing stocks to fall in the long term.

The problem if they sit longterm on their current model is that it won't sustain the growth rates they need in the phone segment to maintain their financial growth for what Wall Street expects of any healthy corporation. I explained the issue, it stems from Apple now having over 70% of its revenue from just the iPhone and iPad alone.

My 2 posts on the subject :

Originally Posted by KnightWRX

There's a very big reason would do this :



Look at that chart. iPad Mini, a new "smaller/cheaper/different" iPhone, Apple is starting to need these things. The problem is that iOS devices are now over 70% of Apple's revenue. The "one model" strategy works as long as the market is showing good growth numbers, but alas, markets don't just grow indefinitely, they reach a point of maturity. The smartphone is probably getting there pretty soon and competition is getting vicious. A market with close to no growth and vicious competition will require Apple to diversify its offering in order to keep up its market share.

To keep showing growth to please shareholders, Apple basically has to do this before its too late. The iPad Mini was a similar move, open the doors to new growth possibilities for Apple, at the cost of some cross-model canabilization. Best to steal 3 million of your own sales and 2 from the competition than simply losing those 2 million sales, especially when your revenues are so dependant on the segment.

The only other possibility for Apple at this point to keep their growth rate would be to launch into yet another segment and be successful (TVs could be a possibility here, so could wearable computing like glasses/watches). Apple has reached maturity in many of its segments already (online services where it struggles with lackluster offerings/the traditionnal computers that is a very mature market with very small growth if not contractions from time to time) and the iPod is showing signs of dying off as a relevant revenue generator (and you can forget about growth in the segment if the trends of the last few years remain constant).

Originally Posted by KnightWRX

Uh ? Apple has been making "low cost" since forever to expand its market presence in segments that become near saturation point. 999$ MacBooks, then MacBook Airs, iPod Minis, Nanos, Shuffle even for that under 100$ PMP. The Mac Mini for a presence in the 500-1000$ desktop market.

The iPad Mini...

What Apple doesn't do is razor thin, cut throat margins. When Apple enters a low cost segment of a market, it does so at the higher end of the low cost segment and makes sure to keep its margins high.

Phil Schiller here just says the same thing I say in my 2nd post. Apple won't sacrifice margins (he calls it "quality") for pure market share. But what they usually do is sacrifice functionality to keep high margins (call it quality if you want) on lower-priced products.

Expect an iPhone based on their earlier lower priced, entry level products. Basically, the iPod Mini/Nano/Shuffle, the Mac Mini or the iPad Mini of iPhones. It's coming, that's about sure. Apple needs to expand their market ahead of the coming saturation of the smartphone segment, when growth will hit a mature level and stop showing double digit gains every quarter.

Otherwise, their own corporate revenue growth will be slowed and it won't sit well with investors, as it will be perceived as Apple running out of steam (which yes I agree is ridiculous, but is a reality of our economy of growth).

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Originally Posted by RolyPolyBird

Metal and plastic are so 2000. Bring on liquid metal!

Samsung already did, 6 years ago. Are you suggesting Apple should copy Samsung ?

[NYY FaN]

so.. they didn't sacrifice quality when making the ipad mini?

[Dusky600]

Theres already a cheaper iPhone. It's called iPhone 4 and iPhone 4S , makes no sense designing a whole new phone just to be cheaper.

[AppleScruff1]

Originally Posted by NYY FaN

so.. they didn't sacrifice quality when making the ipad mini?

No. With the iPad Mini a retina display and fast processor suddenly become unnecessary. Good enough became ok.

[CGJay]

I don't understand how an unlocked iPhone 5 costs £525 while the iPad costs £399. Would it kill them to lower it to $419 or something? I think many, many more people would buy the iPhone if it was just that little bit cheaper.

[lolnick]

"every product that Apple creates, we consider using only the best technology available. This includes the production pipeline, the Retina display, the unibody design, to provide the best product to the market."

Every product? Man the iPad mini has a nice retina screen.....oh wait

[KnightWRX]

Originally Posted by lolnick

"every product that Apple creates, we consider using only the best technology available. This includes the production pipeline, the Retina display, the unibody design, to provide the best product to the market."

Every product? Man the iPad mini has a nice retina screen.....oh wait

He said they "consider using". What makes you think they didn't consider the retina display for the iPad Mini ?

[ugahairydawgs]

Originally Posted by Peace

Are you saying the 3GS wasn't quality built ?

No. Just like the buggy wasn't quality built. I'm just saying that we've moved past that.

Originally Posted by kdarling

Can you name a currently popular phone in the under $200 target market range that doesn't have a plastic or polycarbonate body?

The 16GB iPhone

[Spidder]

1. Build high quality products
2. Let the others build crappy junk
3. Profit

[driceman]

Steve would have done this, although "highest quality" and "no Retina in the iPad Mini" are a bit contradictory.

[Mr.damien]

Originally Posted by bobenhaus

Apple has no choice but to go cheap if they want to be able to compete in the future. Deal with it.

Hahaha, you are so wrong. Apple get 80% of all the mobility market profit.

Why do you think that Samsung want to increase their margin ?
To be able to compete in the future ...

On the other side, if they start to build crap products, their image will be broken and people won't see any reason to buy expensive products anymore.

[mrsir2009]

Originally Posted by Popeye206

Yaaaawwwwwn..... So, Phil confirms the obvious. Apple does not do cheap.

I'm guessing they'll just sell the iPhone 4 and 4s as their "cheap" alternative. They already do in other markets so why do something different in China????

Well, if they did make a completely different phone it would be cheaper to produce than the 4 and the 4S. Apple’s older phones would probably cost about the same to produce now as when they came out, which is why the price drops are so modest (coz Apple has to pay for it out of their margins ). A new, redesigned low end iPhone however, would cost less to produce (as it’d be optimized for low cost) so Apple would be able to sell it even cheaper than the 4/4S (thus reaching a bigger market) but still be able to mantain high margins

[apple-win]

Originally Posted by solamar

Samsung GSII phones, Motorola Driod X, etc..all had same issue. Funny, media sensationalized it, Apple had to respond(apples fault right?) no.. But they sure had to fix it, even though several generations of older phones had the same problem..

Someone wanted to 'Gate' the issue for sensationalism's sake.

I had an iPhone 4, my parents did, my co-workers did.. never had the issue any worse than others with Samsung or Motorola Phones of the time. my GSII, when I read about it, had the EXACT same issue in the lower corner in-fact, when I tested it on my new iPhone 4. I was worried when I was switching to the iPhone..

It's all hype imo unless it impacts me directly now.. Everything is just to get traffic clicks and stock manipulation as far as I'm concerned. Cynic.. I know.

Don't get me wrong. I don't defend other companies. There is no perfect design in real world.

[phillipduran]

Originally Posted by bobenhaus

Apple has no choice but to go cheap if they want to be able to compete in the future. Deal with it.

Spoken like a true member of the get it wrong herd.

Your thinking is completely wrong. Apple's history with the iPhone shows this. Are you a project manager at RIM? Palm perhaps?

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Originally Posted by apple-win

Don't get me wrong. I don't defend other companies. There is no perfect design in real world.

Sporks are pretty bad a**.

[KnightWRX]

Originally Posted by ugahairydawgs

The 16GB iPhone

The 16 GB iPhone is sold for 650$, it's not in the under 200$ category. Remember, we're talking unsubsidized prices for emerging markets.

[whatever]

Originally Posted by apple-win

You forgot the antenna problem

The antenna problem really wasn't an issue. It did not prevent anyone from buying the iPhone 4 and they kept that phone live for a full year. The only thing that hurt sales was the rumors of the iPhone 4s.

The average user does not care about scratching. It happens.

The "cheap" iPhone will always be last years model.

[mono1980]

Originally Posted by iAco

No ****.

You'd have a severe mental illness if you think Apple will go from metal to plastic.

I'd be disgusted.

Original iPhone to iPhone 3G. I hope you have your vomit bag.

[apple-win]

Originally Posted by phillipduran

Sporks are pretty bad a**.

Is it American English?
For sure, it's not Queen's English.

[sbrhwkp3]

Originally Posted by iapplelove

I have pretty good sized fingers and still don't want a screen that big in a smart phone. It's not practical imo

That's fine, but the GSIII sales numbers don't lie. A lot of people want a phone that size, including myself.

It was only a matter of time before the iPhone line started to get fragmented. How many different iPods came after the original iPod? I'm honestly shocked it has taken this long.

[mrsir2009]

Originally Posted by Mr.damien

Hahaha, you are so wrong. Apple get 80% of all the mobility market profit.

Why do you think that Samsung want to increase their margin ?
To be able to compete in the future ...

On the other side, if they start to build crap products, their image will be broken and people won't see any reason to buy expensive products anymore.

Yeah, but what happens when everyone that can afford an iPhone buys one? There’ll only be a certain amount of people who will upgrade every year. The rest will keep their iPhone for three, four years before buying a new one. So Apple’s profits will drop.

[imacintosh.0]

Originally Posted by bobenhaus

Blackberry 10 will be released very soon and that will send shivers down Apple Back.

lol...Apple is doomed!

Originally Posted by apple-win

You forgot the antenna problem

lol...Yeah the antenna problem nearly destroyed apple. It affected so many millions it did, that antenna problem. Luckily apples customers are all brainwashed, so they ignored the problems

Originally Posted by GermanyChris

They've use plastic before and it was ooohh ahhh "Magical"

Yeah I just finished reading a bunch of articles where all the iPhone users were saying plastic was magical.

Originally Posted by bobenhaus

Apparently you havent read the news about carriers are selling out of preoders of the new Blackberry 10. I suggest you start to read before posting your info.

http://bgr.com/2013/01/10/blackberry...alysis-287451/

Lol.

Oh and /s.

This forum is great for a laugh sometimes!

[whatever]

Apple no longer lives and dies by a product.

For years the iPod was Apples most important product line and as sales started to slow down they moved into a new market, smart phones.

When the smart phone market slows down, Apple would have already pivoted (once maybe twice) into other markets.

The smart phone (as we now know it) has a limited life (in five years time, we'll all cringe when we see an iPhone in an old movie or TV show).

[bryanc28]

Apple has to make a "quality" phone first. They sacrifice quality so they can push out phones as fast as possible.