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UPDATE: Will Apple introduce a lower-priced iPhone?

Meanwhile, new retail options boost affordability

By , Network World
January 10, 2013 02:42 PM ET

Network World - Apple is moving ahead with plans for a less expensive iPhone, possibly with a plastic instead of metal body, according to a new report. [Update:] But a top Apple executive this week flatly says that "Despite the popularity of cheap smartphones, this will never be the future of Apple's products."

[Update 2:] The comments, by Apple senior vice president Phil Schiller in a Shanghai newspaper interview that was widely linked to and commented on, have now been changed by the newspaper, according to a Reuters story

At the same time, new retail options for consumers already are making even the flagship iPhone 5 more affordable.

BLOG POST: Phil Schiller puts damper on cheap iPhone rumors

MORE: Why a cheaper iPhone model makes economic sense

Citing "people briefed on the matter," The Wall Street Journal this week reports that while the idea for a less expensive iPhone model has been talked about at Apple for years, the plan for one now "is progressing" and could result in a product launch later this year, according to one of the people briefed.

The speculation is that Apple could hold down costs by switching from the all-aluminum unibody, re-introduced with the iPhone 5 in September after moving away from the all-metal original 2007 iPhone, to a material such as polycarbonate plastic. Nokia's Lumia smartphone line uses the same material and has won praise for its build quality. The iPhone 5 is rare: Nearly all smartphones still use some kind of plastic or plastic and glass combination for their bodies.

But in an interview with the Chinese newspaper Shanghai Evening News, published Wednesday, Jan. 9, Apple Senior Vice President of Worldwide Marketing Phil Schiller directly addressed these rumors. (The interview was noted by and; these quotes are from a translation provided by 

Talking about Apple's products in China, Schiller said "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."

Let's repeat that: With roughly just 20% of the smartphone market in units, Apple has 75% of the entire market's profit.

In a brief comment on the interview, at his DaringFireball blog, technology writer and Apple watcher John Gruber, observed, "This doesn't mean Apple isn't going to produce a cheaper iPhone. Schiller is simply stating what should be -- but clearly isn't -- obvious to everyone: Apple goes for profit."

Schiller's comments still leave open the door for Apple to create a lower-priced iPhone. But it will do so on Apple's terms: maintaining first extremely high design and build quality, which are essential in Apple's commitment to creating not just functional but beautiful products, and second the profitability of the products it sells.

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