7 Ways Apple can Make “Cheap” iPhones: But "we won’t", says Marketing VP Phil Schiller

  • Jan, 11, 2013, 02:47 PM
Cheap Apple iPhones
Cheap Apple iPhones


Apple's Senior Vice President of Worldwide Marketing Phil Schiller, who reported to Chinese newspaper Shanghai Evening News "cheap smartphones will never be the future of Apple products", denied current rumors about cheaper iPhone.

Earlier this week, reports from The Wall Street Journal and Bloomberg said Apple is working on a cheaper iPhone that would launch later this year. However, Schiller appears to be denying rumor that in a bid to compete harder against Android-based products and to expand its reach into emerging markets the company is planning to start selling less-expensive versions of its most-admired iPhone later this year.

According to Mashable, Reuters and several other news outlets have reported that Apple has certainly dismissed the idea of a cheap iPhone after hearing the comment of Schiller. Later, Reuters withdrew its article, claiming it was "was subsequently updated with substantial changes to its content."

"Reuters has withdrawn the story headlined 'Apple exec dismisses cheaper phone as a market share grab-report' which was based on a Shanghai Evening News report that was subsequently updated with substantial changes to its content."

In additon, Shanghai Evening News could have gotten the quote from Schiller wrong, or Reuters could have received reliable info from another source that Apple is indeed working on a cheaper iPhone, says Mashable.

On the other hand, there are other confusions based on the rumors about Apple selling "cheap" smartphones. According to Information Week, Schiller may be meaning the quality and not the "price" of the iPhone.

Information Week explains the scenario as the following quality changes that Apple could bring in the near future.

1.       Use of plastic body- Aluminum, used to make iPhones distinctive outer casing that costs 92 cents per pound whereas plastic is cheaper.

2.       Use of less expensive or smaller touch screen- The touchscreen is the iPhone's single most expensive component costing $44 on the iPhone.

3.       Alternate Subsidy Model- Apple cannot expect carriers to play high enough subsides to make a $99 or $199 iPhone sufficiently profitable.

4.       Use of Cheaper Flash Memory- Flash memory accounts nearly 5 percent of the total materials cost of Apple iPhone.

5.       Use of recycled or reclaimed electronics- Apple's iPod and iPhone recycling program might be useful as a way to obtain electronic components at minimal cost.

6.       Lower Gross margins- Competition will make it hard for Apple to maintain a 50 percent or better gross margin for a low-end phone.

Use of less capable camera- Apple might be able to save a few


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