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Tuesday, January 15, 2013, 10:55 pm PT (01:55 am ET)

John Sculley says Apple needs cheap iPhone for emerging smartphone markets

In an interview with Bloomberg Television late Tuesday, former Apple CEO John Sculley said the company needs to focus on creating a variant of its iPhone tailored to emerging markets if it wants to grow, as developed regions are becoming saturated with the smartphone.

John Sculley

Former Apple CEO John Sculley.


Speaking with Bloomberg Television from Singapore, Sculley said Apple needs to adapt to a "very different world" in which smartphones are selling at increasingly low prices.

“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," Sculley said.

The former Apple chief's statements come amid reports that the Cupertino, Calif., company has drawn down orders from iPhone parts suppliers, though market analysts have yet to agree on how significant the cuts are or what they mean. There are also rumors floating that Apple is preparing to release a low-cost iPhone model before the year is out.

Sculley also suggested that handsets from rival manufacturers are catching up to Apple in terms of innovation. He pointed out that the differences between the iPhone and a model from a competitor like Samsung have decreased to a point where the two are nearly on equal footing.

“Samsung is an extraordinarily good competitor,” Sculley said. “The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.”

In November, research firm Gartner found that Apple's share of worldwide mobile device sales rose to 5.5 percent in the third quarter of 2012. While the iPhone maker took the third spot overall, it trailed far behind the world's top two manufacturers, Samsung and Nokia, which had a respective 22.9 percent and 19.2 percent share of the market. As far as smartphone sales go, however, Apple and Samsung lead the world with a combined market share of 46.5 percent.

While Sculley's comments were somewhat critical, he said that current Apple CEO Tim Cook is “exactly the right leader” for the company due to his extensive background in supply chain logistics.