Apple pours cold water on talk of cheap iPhones, will keep focus on quality and profit

11 Jan 2013

The iPhone 5

In an official interview with a Chinese newspaper, Apple’s senior vice-president of worldwide marketing Phil Schiller played down mounting speculation that the tech giant may make cheaper smartphones. Instead, the company will continue to profit from demand for high-end smartphone devices and could capture 50pc of the 320m high-end market this year.

In recent weeks, analysts have been adding fuel to the fire that Apple may make a cheaper smartphone to address the low-end market dominated by Google’s Android ecosystem.

While initially speculation centred on an iPhone mini device, this week a report in The Wall Street Journal suggested that rather than a smaller device hitting the markets instead Apple would unveil an iPhone made of lower-cost materials – plastic and polycarbonate perhaps, rather than aluminium and glass as seen on the iPhone 5.

However, in what is understood to have been an official interview with Chinese newspaper Shanghai Evening News, Schiller tackled the subject, saying a cheaper iPhone would “never be the future of Apple products.”

He said every product Apple creates only uses the best available technology.

In other words, using cheap materials just to flog more phones is simply not in Apple’s DNA.

According to a translation obtained by The Next Web, Schiller said: “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 20pc, we own the 75pc of the profit.”

This is in keeping with Apple’s consistent ethos of producing high-end products that, while expensive, deliver handsome profits.

Apple maintains focus on profitable high end of smartphone market

Despite Schiller’s denials, the buzz around the notion of a cheaper iPhone has prompted prominent Apple analyst Gene Munster from Piper Jaffray – who has in the past predicted with certainty there will be an Apple television – to point out that a lower-cost iPhone, if it came into being, could target a vast market tipped to reach 580m in sales this year.

Munster also said the high-end smartphone market – phones that sell for more than US$400 – will be about 320m units, out of which Apple is likely to capture 50pc of sales.

But that means Apple is deliberately missing out on the other 65pc of the market – some 580m units – by maintaining its focus on high-end smartphones.

Somehow I don’t think that bothers Apple too much. As one of the world’s most profitable tech companies it seems to know what it’s doing.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years