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Apple: Moving to Make Things “More Affordable”

MacBook Pro, iPad and iPhone | Apple Official Website

MacBook Pro, iPad and iPhone | Apple Official Website

Last Tuesday, during the Goldman Sachs Technology Conference, Apple CEO Tim Cook said that they are moving to lower the costs of their products, as well as remove barriers to entry for its ecosystem. But he also added that they will not sacrifice the quality of their products to do that, even for devices that will target emerging markets.

Creating Affordable but Great User Experience

During the conference, Cook revealed in an interview Apple’s plans to create great user experience for customers who find the price of existing iPhone models very expensive. In relation to this, he pointed out the company’s recent strategy of keeping the legacy handset models on the market at reduced prices while rolling out the iPhone 5.

If you look at what we’ve done to appeal to people who are more price sensitive, we lowered the price for iPhone 4 and iPhone 4S, and in December quarter, we didn’t have enough supply of iPhone 4, so it surprised us as to the level of demand we had for it.

Cook also recalled how the original iPod carried a $399 price tag and noted how consumers can buy an iPod shuffle at $49.

We are making moves to make things more affordable. Instead of saying how we can cheapen its iPod to get it lower, we said how we can do a great product, and we were able to do that. The same thing, but in a different concept in some ways.

The CEO also said that his team struggled a couple of years ago in figuring out how they can build a cheaper Mac.

We concluded we couldn’t do a great product, but what did we do—we invented iPad. Now all of a sudden we have an incredible experience and it starts at $329. Sometimes you can take the issue and you can solve it in different ways.

The Much-awaited Affordable iPhone

On the other hand, Cook did not give a word regarding the rumored low-priced iPhone. However, Piper Jaffray’s Gene Munster followed the CEO’s speech, predicting that such device will be available during the September quarter of 2013.

We continue to believe Apple will have a cheaper phone product to address the emerging markets, which may or may not be similar to existing iPhone. Additionally, we note that over time, something like the rumored smart watch could be an option in addressing emerging markets with a lower cost product through a different form factor (iPad as cheap Mac).

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