Apple CEO shoots down idea of cheap new iPhone
Cook says there are other ways to boost revenue, like lowering older model prices and creating new products
IDG News Service - Apple will not create a new, inexpensive iPhone just for the sake of offering a cheaper alternative, Apple CEO Tim Cook said in a speech on Tuesday.
The company's focus is on creating great products, and it will not make a smartphone that does not past the quality test, Cook said during a webcast from the Goldman Sachs Technology and Internet conference, which is being held in San Francisco.
"There are other companies that do that, that's not who we are," Cook said. "Our North Star is great products."
Instead, the company is now dropping prices on the older iPhone models. That has been successful, and the demand for iPhone 4 models in December was greater than supply, Cook said.
"It surprised us as to the level of demand we have for it," Cook said.
Lowering the price on older models is just one of the approaches Apple is taking to reach out to price-sensitive buyers. It's not easy to balance quality and price, and that's when innovation comes into play and new products could be created to meet consumer demand, Cook said.
"Sometimes you can take the issue ... and you can solve it in different ways," Cook said.
For example, the first iPod that shipped in 2001 was priced at $399, and now users can buy an iPod Shuffle for $49. There was also a big demand in the past to drop the price of Macs to under $500, and Apple tried and couldn't do it, so it created the iPad tablet.
Apple will have more room to grow in the smartphone market, and its market share has not flattened in the wake of increased competition, Cook said.
The global smartphone market is about 700 million units, and is projected to double in a few years, Cook said. The iPhone is also available to only 50 percent of subscribers worldwide, with a big market to tap into.
In addition, iPhone shipments are increasing at a fast rate, Cook said. About 500 million iPhones shipped from 2007 to the end of last year, with 40 percent of the iPhones shipping in the last year, and 47.8 million shipping in the last fiscal quarter.
"Frankly, I see a wide open field," Cook said.
Beyond the iPhone, Cook said that the tablet market will continue to grow, and is projected to top 375 million in three years, which will outpace the contracting PC market.
"I think we're in the early innings of this game," Cook said.
Apple will also continue to look at acquiring companies as it builds products, but will be especially careful when looking at big companies.
- Path Selection Infographic Path Selection Infographic
- Hyperconvergence Infographic A wide range of observers agree that data centers are now entering an era of "hyperconvergence" that will raise network traffic levels faster...
- Preparing Your Infrastructure for the Hyperconvergence Era From cloud computing and virtualization to mobility and unified communications, an array of innovative technologies is transforming today's data centers.
- How WAN Optimization Helps Enterprises Reduce Costs If you wanted to break down innovation into a tidy equation, it might go something like this: Technology + Connectivity = Productivity. Productivity...
- Cloud Knowledge Vault Learn how your organization can benefit from the scalability, flexibility, and performance that the cloud offers through the short videos and other resources...
- LIVE EVENT: 5/7, The End of Data Protection As We Know It. Introducing a Next Generation Data Protection Architecture. Traditional backup is going away, but where does this leave end-users? All Personal Technology White Papers | Webcasts
Our new weekly Consumerization of IT newsletter covers a wide range of trends including BYOD, smartphones, tablets, MDM, cloud, social and what it all means for IT. Subscribe now and stay up to date!