A number of media outlets this week issued reports claiming that Apple is planning to release a more economical iPhone model sometime in 2013. While the initial report from Digitimes may have been glossed over by many, subsequent reports were soon published by both the Wall Street Journal and Bloomberg. The thrust of these rumors was that Apple, in an effort to make inroads in emerging markets and to appeal to more cost-conscious consumers, was working on a iPhone model in the $99-$149 range that would utilize cheaper materials so that Apple could maintain its already healthy profit margins.
Addressing these rumors in a somewhat roundabout way, Apple's Senior VP of Marketing Phil Schiller on Thursday was interviewed by the Shanghai Evening News where he arguably dismissed the notion of a cheaper iPhone.
Interviewer Huang Yinlong spoke to Schiller about Apple’s products in China who said that “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.”
“At first, non-smartphones were popular in the Chinese market, now cheap smartphones are more popular and non-smartphones are out,” Schiller added later. “Despite the popularity of cheap smartphones, this will never be the future of Apple’s products. In fact, although Apple’s market share of smartphones is just about 20%, we own the 75% of the profit.”
Well that puts to rest any theories - including my own - that Apple would release an iPhone without a Retina Display. It also puts a damper on speculation that this rumored iPhone would utilize cheaper plastic materials in an effort to keep costs down.
Note, though, that Schiller's comments don't necessarily dismiss the potential for Apple to release a more economical iPhone, but rather emphasize that Apple is not willing to sacrafice build quality or the user experience simply to add a cheaper iPhone to its product line.
Apple has long valued profitshare over marketshare, but the unbelievable success of the iPad Mini may prove didactic for Apple.
Follow me here - the iPad Mini, priced at $329, offers the same build quality and user experience as the fourth generation iPad, albeit at a slightly lower price point. Apple CEO Tim Cook even admitted that the profit margins on the iPad Mini are much less than what Apple enjoys for other products. That said, Apple was for a long time struggling to keep up with exceedingly high demand for the iPad Mini. To that end, the iPad Mini may have shown Apple that it can make up for lower margins with volume, and perhaps, attract an entirely new demographic of consumers in the process.
And remember, when Apple released the third-generation iPad and offered the iPad 2 at a discount, iPad 2 sales grew drastically. Indeed, Tim Cook explained during Apple's April 2012 earnings conference call that the $399 iPad 2 resulted in a "marked change in demand" that caught Apple executives by surprise.
All that said, Apple may apply its iPad Mini strategy to the iPhone. And if we take Schiller at his word - and there's no reason not to - we shouldn't expect a cheaply made iPhone, but rather a cheaper iPhone that still sports the same build quality and user experience Apple works hard to deliver time and time again.
Of course, it's equally plausible that Apple may simply continue selling pervious generation iPhone models at steep discounts rather than release a new, more economical, iPhone model alongside a new iPhone.
Apple of course never discusses upcoming product roadmaps, but it'll be interesting to see if there are any statements from Apple executives worthy of dissection during the company's earnings conference call in two weeks.
via Next Web