Sam OliverBernstein 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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96 Comments
It's not "for the rich". It's for those that value their time more than folks that have the innate need to micro-manage, and system-integrate their lives.
While the iPhone nano makes a lot of sense to me, the cost of the phone is not the problem but the data charges that go with a smart phone. And because I find it very unlikely apple is going to release a phone without the appstore ecosystem, this rumor is hard to believe.
IMO the only way an iPhone nano makes sense is if there is a wifi only option, or a data plan that is month to month like the iPad.
In order to do this there would be no need for a different form factor at all, and this should make everyone (besides the carriers) happy.
One thing possible is that Apple buying airtime from carriers and use it with the prepaid carrier-free cheaper iPhone just like some company in the UK such as Tesco etc. (bulk airtime purchase in case of Tesco). All parties happy - carrier got their data payment, Apple got to sell more iOS devices and customer can buy, activate and use them cheaper than what currently on offer.
It's not "for the rich". It's for those that value their time more than folks that have the innate need to micro-manage, and system-integrate their lives.
Its for people who value their time and have more money than most. Even Apple say that.
Less expensive phone. Universal SIM. Dual-mode radios. Carriers bidding for iPhone service. I still think this leads to the possibility of an Apple MVNO service for the iPhone. I realize that this is seemingly at odds with the statement that "the company is also said to be looking to expand its carrier partnerships" but maybe that expansion deals with the bidding process.
On another note, it is good to see that Apple recognizes that hanging on to all that cash is not delivering much value to the company or its shareholders. Prepaying for components is an excellent use of the money although it will probably just increase future gross margins and free cash flow due to discounts afforded Apple. I still think they have plans for a major play.