Given that Apple sold 47.8 million iPhones during the fourth quarter, won't Apple eventually hit a wall in the number of customers it can serve, necessitating the need for a low-cost iPhone in emerging markets? Apple CEO Tim Cook says no.
Cook appeared yesterday at the Goldman Sachs Technology and Internet Conference, where he was asked if there is a limit to Apple's potential market share gains. Cook responded in a very Apple fashion, arguing that the word limit is not "in the Apple vocabulary."
More specifically, however, Cook said that the smartphone market will hit 1.4 billion devices in the next four years, up from 700 million now. But "there's a lot more people in the world than 1.4 billion, and people love to upgrade their phones fairly regularly," he said.
Apple has sold more than 500 million iOS devices since 2007, but 40 per cent of that was last year. "So there's incredible momentum there," Cook insisted. "Frankly speaking, I see a wide open field."
When asked if Apple needed a low-cost iPhone to break into emerging markets, Cook said Apple looks at the issue differently. Apple opted to lower the price on the iPhone 4 and 4S with the release of the iPhone 5; "it surprised us as to the level of demand we had" for the iPhone 4 after the price cut, he said.
"We have made moves to make things more affordable," he insisted. He pointed to the iPod, which debuted at $399 (£250) but can now be had for $49 (£30) with the iPod shuffle.
"Instead of saying 'how can we cheapen this iPod to get [the price] lower, we said 'how can we do a great product?'" Cook said.
That's the driving force behind Apple's thought process, Cook said. "The North Star for us is always a great product, not how do we hit a price point," he said. "And that has served us well. I think it will continue to serve us well."
Reports of Apple pursuing a low-cost iPhone emerged earlier this year. The Shanghai Evening News eventually published a story quoting Apple's Phil Schiller as saying Apple "will not push a cheaper smartphone." But the paper later updated its story and now quotes him as saying that Cupertino "will not blindly pursue market share."
Similarly, Apple is not driven to boost the screen size on its iPhone simply so it can have the most headline-worthy specs. He pointed to the PC industry, which for years has competed on having the largest drive or fastest processor.
"Does it matter?" Cook asked. "The truth is, customers want a great experience and quality, and that's rarely a function of any of those things."
Cook said OLED displays produce "awful" colour saturation, whereas Apple's Retina display is "twice as bright as an OLED display."
"The customer experience is always broader [than what] can be defined by a simple number," he said. "What Apple does is sweat every detail."
Also at the conference, Cook called the Greenlight lawsuit over a shareholder proposal a "silly sideshow."