Tim Cook calls BS on production cut rumors, stays non-committal about low cost iPhone
Apple’s stock has been left battered and bruised in the last couple of months thanks to ‘reports’ about the iPhone 5 not selling well and Apple cutting down orders for displays for the phone. As a result, Apple’s stock which was once selling for almost $700 is now barely able to maintain $500, something that obviously didn’t please CEO Tim Cook. At the just concluded earnings call, Cook made his thoughts clear and urged analysts and members of the press to question the accuracy of such rumors.
“It is good to question the accuracy of any kind of build plans. Supply chain is very complex,” Cook said during the call. He mentioned there can be many variables even if one data point is accurate, variables like change in sources, performance of suppliers among others. Apple sold a record 47.8 million iPhones in its last quarter at an ASP of $640, which is almost similar to that when the iPhone 4S was launched.
Another burning question throughout today’s call was that of a low cost iPhone and the probability of launching a number of iPhones with variable display sizes. Cook answered them in a variety of ways but was clear that Apple wasn’t looking at increasing the display size of the iPhone. “We put a lot of thinking into screen size and believe we have picked the right one,” Cook said.
He still maintains the tried-and-tested line of thought that users should be able to use iPhones with a single hand and increasing the display size could compromise on that front. But then Apple is known to make such comments and do the exact opposite. For many years, Apple had maintained that the 3.5-inch display size was perfect and there was no need for a larger display. They launched the iPhone 5 last year that had a larger display but still could be used with one hand.
Cook remained non-committal on whether Apple would launch a low-cost iPhone. Initially during the call he maintained he was happy with the current state of affairs and toed the usual Apple line that it won’t compromise on user experience by cutting corners. He even said he was satisfied with international sales of the iPhone 5, which had a higher sell through than the iPhone 4S. Later in the call, however, he also mentioned how Apple managed its iPod product portfolio by launching a variety of iPods at different price points. Yet, the iPod touch, which is the most expensive of all the iPods, accounts for more than half of iPod sales.
Cook did the best he could to bury the matter but then you never know what Apple would end up launching. And like always, he is promising a year chock-full with exciting product launches. Will one of them be a low cost iPhone? That only time will tell.