Monday, February 28, 2011, 01:00 pm PT (04:00 pm ET)
Comments from Apple exec Tim Cook hint at lower-priced iPhone optionsNew comments from Apple Chief Operating Officer Tim Cook that Apple doesn't want its products to be "just for the rich" have fueled speculation that the company is interested in offering a cheaper iPhone.
Bernstein Research analyst Toni Sacconaghi met last week with Cook, Apple Chief Financial Officer Peter Oppenheimer, and Vice President of Online Services Eddy Cue. According to Forbes, the analyst came away with the impression that Apple is "likely to develop lower priced offerings" in its handset business.
Cook also reportedly said that Apple is planning "clever things" to compete in the prepaid handset market. He also said that Apple is "not ceding any market," and the company doesn't want its products to be "just for the rich."
Cook's comments, and the analyst's interpretations, come soon after two prominent publications claimed that Apple is working on a new, smaller, $200 contract-free iPhone that it could sell directly to customers and bypass wireless carrier contracts. Both Bloomberg and The Wall Street Journal said that Apple's alleged plans were in an effort to compete with Google's growing Android mobile platform.
But another mainstream publication, The New York Times, rebuffed those two reports only days later, and said that Apple is not developing a smaller handset. However, it was reported by the Times that Apple has explored opportunities to create a less expensive iPhone.
In his meeting with Sacconaghi, cook reportedly referred to the iPhone as "the mother of all halos," as the handset has expanded sales of Apple's other devices, particularly in emerging markets. Apple has long referred to sales of the iPod — and later iPhone — as having a "halo effect" that drives sales of Macs.
And one emerging market where Apple has found great success in a short period of time is China. Cook reportedly acknowledged that Apple has spent "huge energy" in China, and also noted that it is a "classic prepaid market," which would be an ideal candidate for a cheaper iPhone.
The company is also said to be looking to expand its carrier partnerships. Oppenheimer said that Apple has 175 carrier partners, while rival Research in Motion, maker of the Blackberry, partners with 550 carriers.
Cook also said he believes the tablet market will eventually be bigger than the PC market, and that competition for tablets will be even more intense than with smartphones. He also hinted that the company has interesting new things in its product pipeline.
Finally, Oppenheimer also said that Apple's current capital structure is not efficient. He said the company is likely to use its cash to secure supplies of key components, much like the recent secret $3.9 billion deal Apple recently revealed it made with component suppliers.
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