updated 10:57 am EST, Fri January 11, 2013
Leaves possibilty of cheaper iPhone up in air
[Updated with later clarifications] Newswire agency Reuters has withdrawn a story in which Apple's Senior VP for Worldwide Product Marketing, Phil Schiller, was said to have all but ruled out the possibility of a cheaper iPhone. The story was based on a report by the Shanghai Evening News. Now, though, Reuters says that the Evening News' story was "subsequently updated with substantial changes to its content." The original story is still online in China, but Apple asked the Chinese paper to clarify some comments.
Prior to Schiller's alleged claims, multiple reports, including one from the Wall Street Journal, were suggesting that Apple is planning on building a new low-end iPhone model to complement its usual flagship. The product could theoretically boost iPhone sales in places like China, where the iPhone 5 is prohibitively expensive for most people. Apple's normal strategy though has been to discount older models, which has seen some success. Building a new device could pull in people who want a cheap phone but with less risk of it becoming outdated.
In a revised Reuters article, Schiller is no longer quoted as saying that "despite the popularity of cheap smartphones, this will never be the future of Apple's products." The quote, which seemed to many to be something of a translation error and not consistent with Schiller's previous statements, has been replaced with a more generic comment that Apple does not talk about potential future products.
The article does, however, reiterate Schiller's view that Apple will always strive to make "the best products" and would never "blindly pursue market share," a quote more in line with Schiller's typical expressions and a reinforcement of the company's long-held philosophy that influence and marketshare flow naturally from a determination to make outstanding products.
The change in tone also allows Apple more room to eventually produce a cheaper smartphone if it decides that that is something it wants to pursue. Schiller's revised comments don't explicitly rule out the possibility, but simply restate that Apple won't do so until it can figure out a way to make a less-expensive product that still maintains the company's standards.
Much of the "pressure" on Apple to build a cheaper iPhone comes from speculative pundits rather than any actual evidence that Apple is being hurt by not having one. Despite being seen as a "premium" seller, the iPhone is no more expensive than the best of its competitor's phones and sells phenomenally -- it is currently (and is expected to continue to be) Apple's most popular product line by a large margin, and captures 70 percent of all the profit generated in the entire smartphone industry.
While a lower-cost iPhone would undoubtedly lure new customers and be seen to combat the "threat" of budget Android phones outpacing iOS dominance, the company has a history of preferring to make better products over capturing additional market share. This mentality is most obvious in Apple's Mac line, which while very influential and popular has grown at a much slower pace than its mobile devices. Apple was also very slow to enlarge the size of the iPhone's screen, and eventually just lengthened it slightly while keeping the width identical, unlike the ever-growing line of "phablet" type phones that have already surpassed 6-inch screens despite similar pundit "pressure" to create a larger iPhone to address what the competition was doing.
It is unclear if Schiller simply spoke out of school on the topic, or if he was misquoted or mistranslated to attribute an inference into an actual quote. Regardless, the revised story leaves open the possibility of a budget iPhone -- presuming Apple can come up with one that meets the company's lofty ambitions.