News of Apple slashing orders of iPhone 5 components has put pressure on the company’s stock. It has also sparked speculations that Apple may be working on a cheaper iPhone at least for the emerging markets where a majority of the smartphones being purchased are low-end smartphones.
Former CEO of Apple, John Sculley, also believes that Apple should look at launching a cheaper iPhone for the emerging markets as the market in developing markets like the U.S. and Europe gets saturated.
To achieve this Sculley believes that Apple needs to overhaul its supply chain.
“Apple needs to adapt to a very different world. As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you’ve got to dramatically rethink the supply chain and how you can make these products and do it profitably.”
Describing Samsung as “an extraordinarily good competitor,” he pointed out that “the differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see”. But Sculley believes that Tim Cook is “exactly the right leader” for the job as he is the world’s greatest expert on supply chain.
Recent reports have indicated that Apple is working on a cheaper iPhone with a plastic casing, which could be priced for $99 to $149. Frankly, I think that’s wishful thinking.
As Brian X. Chen of The New York Times points out, even if Apple does end up launching a cheaper iPhone, I doubt it will be that cheap, it will most likely be available for $249-$399 without a contract, which will still make it cheaper than iPhone 4, the cheapest iPhone currently that is available for $450 without a contract. We’ve already seen Apple use a similar pricing strategy with the iPad mini, which is more expensive than the 7-inch tablets from Apple’s rivals, but cheaper than the full-sized iPad. It seems to have worked quite well for them.