Former Apple CEO John Sculley recently sat down with The Economic Times to discuss the launch of his low-cost smartphone brand, Obi, in India. At the same time, Sculley also weighed-in on Apple’s position in the smartphone market, calling his former company little more than “a predictable cash machine.”
First, Sculley was asked about Apple’s changing marketing strategy in India; as a reminder, Cupertino has been offering handsets like its less expensive iPhone 5c on monthly payment plans, it’s reintroduced the iPhone 4, and it’s also looking to increase its presence in smaller Indian towns and cities. However, despite these efforts, the former CEO was critical of both Apple’s initiatives in India and its iPhone 5c handset, saying:
You can repackage a phone into monthly instalments but the reality is - it’s still very expensive. Apple tried with the 5C, it failed because they compromised on product as they used an old processor and left out certain features. Apple’s expectation from product quality is so high but business model requires high gross margins. They generate incredible amounts of cash but if they compromise on that, their stock goes down.
Sculley added: “They have a dilemma – either miss the market where 70% of the industry is or risk falling of their stock price dramatically if they go after the market. One company’s dilemma is another company’s opportunity.”
In this respect, Sculley reiterated an opinion he’s held for some time; back in January the former CEO asserted Apple’s need for a “cheaper” iPhone that could retail effectively in emerging markets. The comparably high price of the iPhone 5c means this “less expensive” smartphone doesn’t fit the bill.
He was then asked about Apple's innovation in the post-Steve Jobs era, and Sculley noted that he feels the company “is not valued today as a creative leap company; it’s a very predictable cash machine.”
Google and Apple are like ATMs, they just keep generating cash. Google takes more risk than Apple. Apple tends to stay the course, and this year is a very big year for Apple in terms of products. It’s not clear that they’re going to demonstrate a creative leap this year despite the products, like they did when Steve Jobs was leader. I think it’s probably unfair to expect them to have a creative leap every two years. Steve’s creative leap came every five years.
Of course, 2014 is the year Apple is expected to launch its so-called “iWatch,” a wearable iOS-connected accessory that will offer health and fitness functionality while bringing a selection of iPhone features to our wrists. An iPhone 6 offering customers a larger, sapphire-coated handset, next-generation iPads, and a refreshed Apple TV are also billed for a late 2014 release.
It’ll certainly be interesting to see what Apple brings to the table later this year. Though before its new hardware is announced, we’ll get our first look at iOS 8 on June 2 at the company’s annual WWDC conference.
We’ll keep you updated with further information as we receive it.
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