In a conference with an analyst from RBC Capital Markets this Wednesday, Mike Abramsky, Apple’s CFO Peter Oppenheimer and CTO Tim Cook signaled the company’s intent of getting into the market for lower-end smartphones. They said that Apple is motivated to provide a “killer” experience in the category of cheap smartphones. Rumors have been aloft from a long time, stating that a lower priced iPhone is going to be launched by Apple when it makes its annual update for the iPhone line this fall.
Many people have suggested that the rise of contracts for prepaid phones is a good enough reason for Apple to enter the cheaper market; however the two company executives were adamant in the interview that the potential advantage which is offered by the new customers is not above the company’s commitment to innovate and creating great designs.
However, many experts have expressed that the gap between Apple and its competitors in the smartphone market and the cash stockpile that it has has allowed the company the luxury of being able to wait and assess their options for a bit longer. Even if Apple is concerned about the potential drop in quality while designing a low cost iPhone, there are strong chances of such a handset coming out this October.
Apple has been doing quite well in offering great devices at prices below those of its rivals (with regard to manufacturing cost), as was the case with the iPad which went a long time as being the cheapest tablet to produce in the market which consisted of a multitude of inferior devices.
The TouchPad from HP has recently been discounted to a level where it is now cheaper than the Apple tablet; however it is doubtful that HP enjoys the same profit margins as Apple on its offerings. Even the MacBook Air is a leader in its category when it comes to pricing, with the competition being unable to match Apple in that regard, even as Intel released the specifications for its Ultrabook.
The main reason behind this is Apple’s monopoly over the worldwide supply chain for parts required for these devices; most believe that this advantage will allow Apple to manufacture low cost iPhones which will still prove to be superior to similarly priced Android based phones. However, the Apple executives maintained that Apple’s superior hardware software integration and duration for software library mean that the company does not have to compete with Android over pricing.
