Ex-Apple CEO: Apple Must Take Advantage of Emerging Markets’ Growth

John Sculley Thinks Apple Needs to Address Emerging Markets with Low-Cost Gadgets

by Anton Shilov
01/15/2013 | 11:58 PM

During the recent econominc downturn, Apple was among a few companies who managed to gradually improve its sales be revealing breakthrough products, lowering prices on some of the offerings and improving its services. Many analysts presently believe that the days of Apple’s rapid growth on well-developed markets are over and the company needs to address emerging markets with appropriate products. A former chief exec of Apple agrees.

 

John Sculley, the man who was hired to Apple from PepsiCo and who ousted co-founder Steve Jobs from the company, believes that Apple needs to take advantage of remarkable growth of emerging markets with its iPad, iPhone and other products. At present, Apple’s devices are simply too expensive for developing countries, whereas the company itself is tailored to make premium products. In a bid to actually develop inexpensive products and gain market share with them, Apple needs to redesign its supply chain on the first place.

“Apple needs to adapt to a very different world. As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you have got to dramatically rethink the supply chain and how you can make these products and do it profitably,” said John Sculley in an interview with Bloomberg news-agency.

For many years Apple has been focusing on innovative products that use expensive components and create new user experiences. Apple naturally continue to sell older-generation products on emerging markets at discount prices, but this will unlikely help it to successfully compete against rivals since previous-gen products sometime lack functionality of current-generation low-end devices.

It should also be kept in mind that Apple earns loads of money by selling music, software and accessories for its PCs, smartphones and tablets. Developing markets hardly provide such opportunities, therefore it is in question whether the company actually wants to gain a strong presence in such countries.

At the same time, it is obvious that in order to set up new financial performance records, Apple has to boost its volumes without reducing profit margins and quality of its popular gadgets. This can be done by expanding sales of existing products and by introducing brand new products to the market. In any case, Apple will have to somehow improve its supply chain to boost volumes. However, this may not be the time for Apple to enter $100 smartphone market just for the sake of the volume.