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.