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

[2499723]

"[A]lthough Apple’s market share of smartphones is just about 20%, we own the 75% of the profit.” -Schiller

Huge profit margins will only sustain Apple so long. If that 20% decides that £600 is too much to pay for a phone, Apple won't be able to make the same claims in the future. My next phone will be the Nexus 4. It's perhaps not QUITE the premium phone Apple is, but it's a solid alternative (I could care less about LTE). If a £280 iPhone existed (that wasn't 2.5 years old - and even the iPhone 4 is still £319), perhaps the Nexus wouldn't be so attractive. If Apple really wants to win over China, do they really think the iPhone 5 is the way to do it? I guess it all remains to be seen. As a friend of mine was saying, however, 'Apple is just taking the piss now, isn't it?' It's an important observation - some of us are just a bit exasperated of being sold 'magical' devices that seem to lose their lustre a bit, all things considered.

 

[szw-mapple fan]

Plastic can actually be a really nice material, if done right

Yeah. Galaxy cases are horrible(they feel cheap). But Amazon's done it with the Fire. I wouldn't mind having that on a cheaper iPhone.

 

[MacDav]

That has nothing to do with build quality.

Apple's build quality is superb.

I bet you it's better than 99% of the apliances/electronics you run into your daily life.

That's normal ware and tare. I wish it would be made of a much more durable material, but if Apple plans on releasing a new phone every year, then it doesn't make economic sense for them.

Either way, phones come and go. If you don't like the scuffing, get a gigantic condom for it.

I don't like condoms.

A regular size condom would work fine, but you would need a gigantic condom for the S3.

 

[KnightWRX]

Actually you are wrong. They entered the smartphone market for just one sole reason: trying to lock as many customers in as possible and forcing a monopoly on media upon us.

I'm wrong how ? I never said "why" they entered the market. You say I'm wrong then state "why" they did. How can I be wrong on something I've not commented on ?

I wasn't wrong on "when" and "how" unless you have some other insight into why I would be wrong on those.

Just read between the lines. Sad fact (and that is what investors slowly realize - and that is why the bubble is bursting): Apple miserably failed to translate iOS-sales into iTunes-store revenue.

Apple has never really been about online services and revenues from those arenas. Look at their financials since the iTunes store opened back in the iPod days, it's always been a very small portion of their revenues.

The App Store and iTunes Store are not big revenue generators true sales of content for Apple. Apple uses them as added value proposition to move their integrated systems, the hardware/software combination that nets them their lion share of revenues.

And by that model, it works just fine.

The iPad wasn't about introducing a tablet and "the post PC era" - the iPad was about locking you to the iBookstore and digital newspapers sold there. That's why Steve solely promoted reading on it. That's why the first one didn't have a front-facing camera.

Again, all you're showing here is quite the lack of understanding on Apple's market strategies. The iTunes store never, ever was a big revenue generator, why would Apple want to switch to it as a their biggest revenue generator ? They make billions off the "toys" and only millions off content. Trying to swap it around is a ludicrous proposition, the money literally is in the hardware/software combos they sell.

 

[Shane 77]

its called losing over 200billion of market Cap since Time Cook to the CEO position and they must be able to compete.

Apple's market cap was aprox $354 billion the day Tim Cook became CEO, the stock was $377. Today the stock is $523 and the market cap is $492 billion. It has gained over $138 billion since August 24, 2011 when Tim became CEO

 

[Shane 77]

Market cap is up 38% since Tim became CEO!

Show me an article proving they lost that much value. Honestly, MacRumor posters freak over Apple losing a penny sometimes.

Even after the 25% decline,
Apples Market Cap is up 38% since Tim Cook
Market cap has gone from $354 billion to its current $492 billion since Tim became CEO on August 24,2011! Stock has gone from $377 to current $523

Not to mention the nearly $700 billion it reached between now and then.

 

[Shane 77]

So, basically, proof that WSJ and Bloomberg are just making this **** up as they go?

What do you expect from a Rupert Murdoch publication?

Wall Street Journal prints that the new Apple Television is coming out every year. There may be a shred of truth. The current iPhone 4 model gets apple around $400 a unit. I suspect once Apple secures China Mobile they may add the antennae it needs, and sell it in China for, say $300 unsubsidized. May guess is those chips and components are even cheaper by late 2013 but then again I'm just taking a shot in the dark just like those "reporters" at WSJ.

 

[imacintosh.0]

Whatever Voonyx.

Lol, nice response! Whatever indeed.

 

[Shane 77]

Their stock price went from $702 to $517 in about 5 months.

After it went from $377(the day Tim became CEO) to $704 as you speak of. It's still up over 38% since Tim took full control.

 

[From A Buick 8]

The first iMac was plastic.

Stop looking backwards.

Plastic feels cheap. When you buy a Apple branded object, it should NOT feel cheap. It also goes against everything Apple stands for.

Plastic iPhones are like knock off LV bags. No integrity. And it's not even a natural material. Non-recyclable. The idea is completely toxic. Stop dreaming people.

Plastic is very recyclable, we do it every day where I work. We take all types of post industrial plastic and process it into lower cost materials.

 

[Shane 77]

I think Apple might "repackage" the lower end phone at some point. By repackage, keep the iPhone 5 internals, but ditch the aluminum case for a polycarbate one with a LOT more drop resistance and more protection for the screen.. Like a 3GS.

I went into an AT&T store to ask about an iPhone upgrade and they all but ran me out of the store because iPhones are "so fragile" (or people in my town are really dumb) They REALLY were hard selling the Android phones, any Android phone over iphones.

About the only valid argument they had was that the iPhone glass fronts and backs get a LOT of returns for minor drops that might not ruin other phones. If the concen is that big at AT&T, I could see Apple caving to pressure for one styled like the 3GS that could handle a little more "living".

AT&T's concern is they pay Apple more $ than Android makers and they get incentives and kickbacks from Samsung!

 

[Michael Scrip]

Actually you are wrong. They entered the smartphone market for just one sole reason: trying to lock as many customers in as possible and forcing a monopoly on media upon us.

Just read between the lines. Sad fact (and that is what investors slowly realize - and that is why the bubble is bursting): Apple miserably failed to translate iOS-sales into iTunes-store revenue.

Apple is... and has always been... a hardware company.

iTunes? Helps sell iPods. App Store? Helps sell iPhones and iPads.

Like KnightWRX said... Apple sells content to add value to the devices. The content was never supposed to be Apple's primary source of income.

By the way... Apple entered the smartphone market without the App Store... and the iPod didn't have the iTunes Store until 2 years later as well.

You can theoretically use an iPhone or iPod without ever spending a dime on music or apps. And that's fine... because Apple already got your money from buying the hardware.

Guess what... that's how most consumer electronics companies function. Apple is unusual in that they also have their own content store.

How can you say with a straight face that Apple failed to translate iOS sales into iTunes revenue?

Did you know iTunes is the largest online music store in the world? Or that the App Store has 40 billion downloads with $7 billion paid to developers?

Guess who's buying all that stuff? iOS users... and Apple keeps a little bit of that money too.

It's absurd to think the iTunes store doesn't generate revenue when it's the most profitable store of its kind.

 

[Boomish69]

It sound's like Phil is saying we won't make a cheaper iPhone because we want to keep the quality high which can be seen as commendable to protect their high standards, but in the next breath it's ok be cause we make a massive profit on it.
Now if I took my car to a garage and found , A : it was extremely good but was ripping me off as their profit was huge on what they charged me, I'm more likely to go to a cheaper garage I know will do a similar job but give me a fair price. Not the best analogy but you get my point, I like Apple's high standards but unless I'm a shareholder I don't want to hear I'm paying over the odds for the privilege.
It's like he boasting that were all being shafted on the high cost of the phone. It's the no1 thing why so many people hate Apple! Why not have the company image Apple is about creating an a amazing Apple product for real people and not just the rich.

 

[Bezetos]

Blah blah blah, same BS we've been hearing from Apple for ages. They can easily reduce their margin to make the iPhone cheaper, it's not about quality at all!

Like them or not, iPhone still has the best build quality of any phone ever made.

Having slight problems with our memory, are we? Antenna-gate, the easily damaged back of iPhone 5? Don't get me wrong, iPhone is a well-built phone, but it had its problems and it's definitely not the "best build quality of any phone ever made".

 

[tCruzin4lyfe]

I think Apple might "repackage" the lower end phone at some point. By repackage, keep the iPhone 5 internals, but ditch the aluminum case for a polycarbate one with a LOT more drop resistance and more protection for the screen.. Like a 3GS.

I went into an AT&T store to ask about an iPhone upgrade and they all but ran me out of the store because iPhones are "so fragile" (or people in my town are really dumb) They REALLY were hard selling the Android phones, any Android phone over iphones.

About the only valid argument they had was that the iPhone glass fronts and backs get a LOT of returns for minor drops that might not ruin other phones. If the concen is that big at AT&T, I could see Apple caving to pressure for one styled like the 3GS that could handle a little more "living".

They push Androids on your for one simple reason, because they were told to. As we all know by now carriers don't make as much money off selling iPhones than they do with Androids and Windows.

 

[imacintosh.0]

They push Androids on your for one simple reason, because they were told to. As we all know by now carriers don't make as much money off selling iPhones than they do with Androids and Windows.

Yep. The companies don't have a preference except for what makes them money. Android phones make them money therefore they're told to push android phones. Business 101. It's not like the regional manager tells his branches how awesome android is and how he wants to share it with the whole wide world.

 

[Dave.UK]

Plastic is very recyclable, we do it every day where I work. We take all types of post industrial plastic and process it into lower cost materials.

Just like we do with aluminum tin cans.....Hang about....

 

[everything-i]

You forgot the antenna problem

That was a design issue, the build quality was still top notch. Still using my 4 today and it looks/works as good as it did the day I got it two and a half years ago.

 

[Eric E. Schmidt]

You don't think usage patterns of devices are taken into account in product design and testing? Apple should be designing and testing that button with hundreds of thousands of presses in mind.

and they are. still doesn't make the original comparison right.

 

[emulator]

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.

I assume they have to pay GSM license fees/royalties. Contrary to what most people here think, Apple did not invent GSM.

 

[uknowimright]

Apple dismisses cheaper iPhone story withdrawn

Reuters has withdrawn the story headlined "Apple exec dismisses cheaper phone as a market share grab-report" which was based on a Shanghai Evening News report that was subsequently updated with substantial changes to its content.

No replacement story will be issued.

http://www.reuters.com/article/2013...20130111?feedType=RSS&feedName=technologyNews

 

[imacintosh.0]

I assume they have to pay GSM license fees/royalties. Contrary to what most people here think, Apple did not invent GSM.

Most people here don't think that, but generalizing always adds to your credibility

 

[gpat]

No, they shouldn't, and this is exactly what Schiller is talking about. The biggest asset that Apple has is not it's iPhone, iMac or iPad. It's the company's image. Apple stands 100% behind their products, so it would make no sense for them to make a cheaper phone just because someone wishes it were cheaper.

Just like they didn't make a cheaper, smaller tablet because someone wished it were cheaper and smaller?

 

[AppleScruff1]

Lol, nice response! Whatever indeed.

That confirms it.

 

[etrinh]

its no high quality in the ipad mini specs have the the iphone 2g SCREEN + 3 year old tech or more!

sorry for be honest

Quality doesn't meet the most recent tech. Quality means its supposed to look good, feel good, and last long.