In recent months, a number of analysts have speculated that in face of the growing competition and Android’s increasingly larger smartphone market share, Apple may consider the option of creating a cheaper iPhone for emerging markets. Now, Apple’s Phil Schiller has effectively trashed the idea, citing that a cheaper iPhone would put Apple’s profits in peril.
The speculation had probably arisen because Apple has recently made a few compromises. While Steve Jobs once vowed not to create a slate any smaller than the standard iPad, Apple did finally enter the mini tablet arena. That was a necessity for the company as the mini tablet arena exploded into growth since Amazon launched the original Kindle Fire.
It was based upon this that many had cited that Apple may make a similar compromise when it comes to iPhone. Creating a cheaper iPhone may make some sense since that can bolster Apple’s overall sales by a huge margin. But the more important question is: how is it going to affect Apple’s profits? In all likelihood, it would hurt Apple’s profits. So even if Apple achieves greater market penetration, lesser profits would render that useless.
It was precisely this point that was cited by Schiller who 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 20 percent, we own the 75 percent of the profit.”
However, analysts are still insisting that Schiller only discarded the notion of a low-quality iPhone, not that of a low-priced one. If Apple were to create such a low-priced iPhone exclusively for emerging markets where sales of standard iPhone are minimal, it may actually bring in more cash for the company. Nonetheless, we will take the possibility with a grain of salt until Apple officially divulges some hint.
Courtesy: PC Mag