Tim Cook On Cheaper iPhone: “People Asked Us For Years For Sub-$500 Mac, So We Created The iPad.”



Speaking at Goldman Sachs today, Apple CEO Tim Cook was asked how Apple intended to address market share in emerging markets, in regards to a cheaper iPhone.

Cook’s response didn’t spill any secrets, but did make it clear that Apple wasn’t interested in just hitting a price point for market share. Apple solves pricing problems by inventing entirely new killer products.

Tim Cook explained his thinking.

“Our North Star is making great products. We wouldn’t do anything that’s not a great product. It’s not why we’re on this earth.

That said, when you look at what we’ve done for people who are more price sensitive, we’ve lovered the price of iPhone 4 and iPhone 4S, and in the December quarter, we didn’t have enough supply of iPhone 4 after we cut the price. It surprised us, as to the level of demand we had for it.

So we have made moves to make things more affordable. And if you look at Apple’s history,the iPod started out costing $349. Now you can walk into a store and pick up a Shuffle for just $49.

For years, people asked, “Why don’t you have a Mac that’s less than $500 or $1000?” And we worked on this, but we concluded we couldn’t do a great product at that price. But what did we do? We created iPad, which starts at $329.

So sometimes, you can take the “issue” and solve it in different ways. But North Star is always great products, not how we hit a price point.

It seems pretty clear to me that Tim Cook is saying that while Apple is interested in making a cheaper iPhone, it won’t just be an inferior version of the current model. It will be a whole new “killer product”: the distinction between an iPod Shuffle and an iPod nano. Great answer.