Apple aims for iPhones for the masses, hints at a cheaper iPhone

Reports surfaced some time ago that Apple was mulling a cheaper iPhone, and a research note by Bernstein analyst Toni Sacconaghi, issued Monday, Feb. 28, seems to point to that happening sooner, rather than later.


The report said that Sacconaghi, after an interview with Apple COO Tim Cook, CFO Peter Oppenheimer and VP of Internet Services Eddy Cue, came away with a bunch of bullet points, Asymco's Founder and Managing Director Horace Dediu has been Tweeting information about the meeting as as well.
For one, Tim Cook, handling day-to-day operations at Apple in CEO Steve Jobs' absence, called the iPhone the "mother of all halos." By that, he meant the "halo effect," which is a marketing term used to explain the bias shown by customers towards certain products because of a favorable experience with other products made by the same company. In other words, the iPhone has helped expand Apple's sales of other products, to an extent not previously seen.

Sacconaghi wrote, and Dediu Tweeted that Cook “appeared to reaffirm the notion that Apple is likely to develop lower priced offerings.” In fact, Cook, said that Apple did not want its products to be “just for the rich,” and that the company is “not ceding any market.” The company has some “clever things” in planning in order to address the prepaid market, too.

Cook went a bit hyperbolic, adding that the iPhone was just below food and water on Maslow’s hierarchy of needs. Maslow's hierarchy of needs is a psychological theory. It is often visualized as a pyramid with the largest and most basic levels of needs at the bottom, and the need for self-actualization at the top. Cook added that ultimately all phones would be smart phones.

Although admitting that the competition in the tablet market could actually be more intense than the smartphone market, Cook emphasized that Apple has a strong head start, which it does, with the Motorola Xoom, the first truly capable Android rival, just launched on Feb. 24.

Oppenheimer noted that Apple has only 175 carriers today, versus 550 for RIM. Carrier expansion is something Apple is focused on, as well. He also indicated that Apple would likely continue to use its balance sheet to do partnerships to secure supplies of key components, which is something Apple has done to control its costs.

Apple has scheduled the iPad 2 event for Wednesday, March 2, at 10AM PST at San Francisco's Yerba Buena Center for the Arts. The iPhone 5's refresh is expected to hit in the June / July timeframe. Apple was up nearly $5 to about $353 in late day trading (EST).