John Sculley: Apple Must Overhaul Its Supply Chain To Make The iPhone Cheaper

John-Sculley

Apple must overhaul its supply chain in a bid to make its iPhone cheaper and meet the demand of low-cost smartphones in emerging markets, according to former CEO John Sculley. The Cupertino company has enjoyed plenty of success with the device in the United States and Europe, but Sculley feels that going forward, Apple will need to depend on growth in emerging markets, where the handset’s premium price tag just won’t work.

“Apple needs to adapt to a very different world,” Sculley told Bloomberg Television today during an interview from Singapore.

“As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you’ve got to dramatically rethink the supply chain and how you can make these products and do it profitably.”

If anyone can do that, it’s Apple. CEO Tim Cook made significant changes to Apple’s supply chain and manufacturing processes when he joined the company as Senior Vice President for Worldwide Operations in 1998. He’s already streamlined the company’s operations to make them super efficient.

Whether Apple will want to make further changes to produce a low-cost iPhone, however, is another matter. If recent comments from Phil Schiller, Senior Vice President of Worldwide Marketing, are anything to go by, Apple isn’t interesting in producing cheap products to grab market share.

It’s looking increasingly likely that the company will have to do something to keep up with its rivals, however — particularly Samsung, who currently enjoys a larger chuck of market share. Sculley highlighted the fact that rival devices, such as Samsung’s Galaxy S series of smartphones, continue to improve and become a greater threat to the iPhone than they have been in previous years.

“Samsung is an extraordinarily good competitor,” Sculley said. “The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.”

The fact that Samsung also offers a range of devices, some of which can cater to emerging markets and budget-conscious consumers, also gives it an advantage when it comes to market share. Because of this, analysts expect the Korean electronics giant to increase its lead over Apple even further during 2013.

  • Shane Bryson

    The iPhone is still selling insanely well. Why would they need a cheaper phone? There is already a budget option available for the iPhone. The iPhone 4 is free, the iPhone 4s is $100, and the iPhone 5 starts at $200. Where is all this crap about the iPhone needing a cheaper option coming from? How do you get any cheaper than FREE?!

  • Gadget

    You had your chance Sculley and you blew it. Your advice is worthless now.

  • matrix3D

    Yeah, this is the guy Apple should be listening to… the guy who nearly bankrupted the company.

  • Sean Carney

    lol yeah cause this guy knows anything. I thought we got rid of Sculley.

  • riktweed

    Back to the X-Files with you!

  • Whodakat

    The iPhone is still selling insanely well. Why would they need a cheaper phone? There is already a budget option available for the iPhone. The iPhone 4 is free, the iPhone 4s is $100, and the iPhone 5 starts at $200. Where is all this crap about the iPhone needing a cheaper option coming from? How do you get any cheaper than FREE?!

    This had me confused as well, but in emerging markets they don’t really do contracts like we do in the states so you have to look at the full retail price. On the “free” iPhone 4 I think the unlocked price is still over $400. So when they talk about a cheaper iPhone they mean a $200 phone period. With no contract. Just walk in buy the phone straight up and do a month to month contract. Honestly, I think this would seriously undercut them here at home. While a lot of us don’t mind signing into a two year contract, many of us who want to change carriers after their contract is up (especially those in family plans) and people just sick of their current carrier would jump all over this. Look at how fast cheap plastic phones get bought up. Plenty of people would snag the cheap iPhone over the normal, more expensive iPhone. Perhaps its something Apple could just release in foreign markets?

  • MrsCleaver

    Yea, cause John Sculley knows so much about Apple. Sculley was the (temporary) death-knell for Apple, and why the company asked Steve Jobs to come back to resurrect it from Sculley’s totally misguided decisions.

    What the hell has happened to Cult that it puts this tripe into print? Shouldn’t this be the kind of rag print in Cult of Android?

  • eldernorm

    the key to any company existing is profit. Selling cheap items with low margin means no profit. Ask Dell how that is going today. #2 pc seller and going bankrupt cause no profit.

    Also, Apple supports Apps (paid over 5BILLION $ to app developers) and equipment makers, etc. People build Apple related items cause they sell. People that buy Apple hardware tend to buy music, apps, hardware, etc. This Market PLAN works.

    Just a thought,
    en

  • TechBell

    Apple isn’t interested in the low-end – never have been; it’s not who they are or wish to be. Their marketing has always been aspirational and they need not compete in the bargain-basement tech carnival with an endless stream of mediocre brands. Do you see Audi, BMW or Mercedes pursuing low-end buyers? No. Nor will you see that with Apple.

  • technochick

    No, Sculley needs to get over himself. Apple has never been about being cheap and it doesn’t need to be now anymore than before.

  • craigburdett

    Sculley? The same guy who cost me tens of thousands of dollars in lost value in Apple stock in the early 90s right? Well, he doesn’t get to have a say. Ever. Simpleton.

    To John Sculley: STFU! You almost killed the best company in the world with your hair-brained ideas and cost investors a literal fortune in the meantime. Climb back in a hole John Scumley.

  • howie_isaacks

    Really? John Sculley? He’s irrelevant. It’s easy to sit back and make idiot statements like this when you have nothing to lose. Sculley was a disaster for Apple, so why would they want to take his advice?

  • beautiful0524

    Really? John Sculley? He’s irrelevant. It’s easy to sit back and make idiot statements like this when you have nothing to lose. Sculley was a disaster for Apple, so why would they want to take his advice?

    do you even know the facts howie?

  • Steven Quan

    Apple isn’t interested in the low-end – never have been; it’s not who they are or wish to be. Their marketing has always been aspirational and they need not compete in the bargain-basement tech carnival with an endless stream of mediocre brands. Do you see Audi, BMW or Mercedes pursuing low-end buyers? No. Nor will you see that with Apple.

    Yeah, I do
    Audi: VW GTI
    BMW: Mini Cooper
    Mercedes: SMART Car

  • Andrew Newsome

    I don’t mind paying a premium (even though it isn’t even that much more these days) for the iPhone as long as my money is paying for good working conditions where they manufacture them, and also to the retail workers. If the money saved is just going towards someones pockets who already earns $200,000+ a year then i am against it.

  • Wirehedd

    The notion that anyone would be naive enough to think John Sculley would have anything to say about about Apple that would be remotely relevant is hilarious. That’s as bad as asking George W. Bush for his opinion on the State Of The Union. Who cares what the idiot thinks? After almost destroying Apple before Jobs was able to extricate Sculley out of the company like a surgery to remove a cancerous tumor. I’m sorry but this is just a waste of bandwidth. Nobody with a brain cares what Sculley thinks about most things and his opinion of Apple is as worthless as a dog fart in a hurricane.

About the author

Killian BellKillian Bell is a staff writer based in the U.K. He has an interest in all things tech and also covers Android over at CultofAndroid.com. You can follow him on Twitter via @killianbell.

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