Tim Cook: We Are Not In the Junk Business to Build Cheap iPhone

Chief Exec of Apple Downplays Importance of Low-Cost Smartphones for Company

by Anton Shilov
09/19/2013 | 11:05 PM

Despite expectations, Apple has failed to create an affordable iPhone handset; the iPhone 5C costs just $100 less than fully-fledged iPhone 5S and is unlikely to become truly popular in developed countries. Tim Cook, chief executive of Apple, does not seem to be concerned about this fact and claims that the company needs to concentrate on its profitability, not just market share.

 

The market of smartphones is growing rapidly these days. Sales of Apple iPhone are also escalating, but at a pace that is well below that of the market. By contrast, the popularity of Google Android, the main rival of Apple’s iOS platform that powers both iPhone and iPad, is increasing rapidly, just like its adoption by the end-users. The reason for strong growth of Android is simple: devices on its base are very affordable and can serve almost every customer in almost every market segment. Many believed that the iPhone 5C was supposed to compete against those mainstream Android-based smartphones, but as it turns out, it will just continue to be a high-end device.

“There’s always a large junk part of the market. We are not in the junk business. The upper end of the industry justifies its higher prices with greater value. There is a segment of the market that really wants a product that does a lot for them, and I want to compete like crazy for those customers. I am not going to lose sleep over that other market, because it is just not who we are. Fortunately, both of these markets are so big, and there is so many people that care and want a great experience from their phone or their tablet, that Apple can have a really good business,” said Tim Cook in an interview with Bloomberg BusinessWeek magazine.

To date, over a billion of Google Android-based devices have been sold. Apple is not far behind as sales of iOS-based devices will cross 700 million mark either in September or early in October. The main problem for Apple is that the popularity of Android is growing faster than the adoption of the iOS.

Perhaps, many investors and market observers will be discouraged by Mr. Cook’s unwillingness to address fast growing market of inexpensive smart devices. But maybe Apple’s team has idea how to address higher-end market segments and broaden the lineup of expensive devices?