A more pocket-friendly iPhone?: Apple’s plans for a cheap smartphone

Tim Cook, after Macworld Expo 2009 keynoteIt’s the strongest hint yet that Apple is planning a cheaper iPhone. Speculation moved up a notch at the start of the year that the firm was about to release a budget model of its smartphone.

Then, the Californian tech giant’s head of marketing Phil Schiller poured cold water on the rumours, saying: “Despite the popularity of cheap smartphones, this will never be the future of Apple’s products.”

But now, the CEO himself, Tim Cook has suggested a cheap iPhone, or at least a less wallet-busting smartphone, is in the pipeline.

Speaking at the Goldman Sachs technology and internet conference in San Francisco, Cook said: “We are making moves to make things more affordable.”

While Apple clearly wants to gain a bigger slice of the smartphone market, Cook said he only saw that as an opportunity. Talking about price being a sticking point for some wannabe Apple owners, he said: “Our North Star is great products. We would never do something iphone 5that isn’t a great product, that’s not why we’re on this earth. That said, if you look at what we’ve done to appeal to people that are price sensitive – lower price of iPhone 4, iPhone 4S, in most recent quarter, not enough supply of iPhone 4 – surprised us.”

But, he said a product did not have to be cheap to be covetable. Giving the example of the iPod, Cook explained: “If you look at Apple’s history, look at iPod: it was $399. Today you can get an iPod Shuffle for $49. Instead of how you can cheapen to get it lower, we were saying how can we make something great?”

And, in a strong indication that Apple was planning to make a cheaper smartphone that also offers something completely different, Cook said: “The same thing in a different way: people said why don’t you have a Mac that’s less than $1,000? We worked on them, we couldn’t do a great product. What did we do? We invented iPad and it starts at $329. Sometimes you can take the issue and solve it in different ways.”

But, whatever Apple’s answer to producing a cheaper smartphone, one thing is for sure said Cook: “We will never make a crappy ipadproduct.”

While some analysts have suggested Apple would introduce a more budget friendly iPhone using cheaper materials, it seems Apple will be taking a more fundamental look at increasing its market share by widening its price range, creating a completely new type of product.

Indeed, while many investors have expressed disappointment with Apple’s sales figures, saying the company was in danger of reaching a plateau, Cook said despite any perceived slowdown of its trajectory, he was feeling “incredibly bullish” about the company’s future.

Despite Apple’s stock having been ravaged by Wall Street in the past year, causing the firm’s valuation to drop more than $200bn over the past six months, revenue in the first quarter was a staggering $55bn and profits were $13.1bn. That still wasn’t enough to change Apple’s share prices for the better.

But, speaking about the future, Cook said:  “I feel fantastic about it. There is no better place for innovation.”

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