Former Apple CEO says Apple must rethink its supply chain to build less-pricey iPhone

Steve Jobs and John Sculley pose with Macintosh

Former Pepsico and Apple CEO John Sculley has issued some advice to Apple’s current boss Tim Cook on the matter of a so-called budget iPhone, Phil Schiller be damned. He told Bloomberg television today that Apple should take into account the realities of today’s cut-throat smartphone business.

He’s all for a more affordable Apple handset, but opines it won’t happen unless Apple’s boss Tim Cook, who under the Steve Jobs regime ran Apple’s manufacturing and supply chain, is willing to “dramatically rethink the supply chain” and give up on some of Apple’s industry-leading margins…

It’s not just the emerging markets, where Apple’s smartphone share is in the single-digit range. Apple needs a more affordable iPhone in order to fight Samsung more effectively.

Samsung’s Galaxy S smartphone series has racketed up a cool 100 million units since its launch in May 2010.

Samsung is an extraordinarily good competitor. The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.

The comment jives with what Apple’s other Steve, Steve Wozniak, has been telling the press in regard to Android.

He sat down with Bloomberg television in Singapore today to talk the budget iPhone.

Apple needs to adapt to a very different world. […] As we go from $500 smartphones to even as low, for some companies, as $100 for a smartphone, you’ve got to dramatically rethink the supply chain and how you can make these products and do it profitably.

The report also mentions that Apple in the face of increased competition is switching to a bi-annual refresh cycle for iPhones and quotes Sculley as saying that Cook is “exactly the right leader” due to his supply-chain expertise.

Here’s the full video.

He’s right on that and I’m sure Cook and Co. know what they’re doing.

If anyone can turn the dream of a less-pricey iPhone into a reality, it’s Cook who brought order to Apple’s supply chain that was in disarray prior to Jobs’s return from exile in 1996.

Today, Apple pre-pays billions to secure multi-year deal on components, it squeezes best prices out of its suppliers and commands the world’s most efficient manufacturing machine.


Don’t forget that Apple defied naysayers by releasing a more affordable iPad, the iPad mini, which starts at $320 for the basic Wi-Fi model with sixteen gigabytes of storage.

DigiTimes, a hit-and-miss trade publication, earlier today corroborated last week’s stories published by The Wall Street Journal and Bloomberg with claims that Apple will keep the costs down by replacing the sophisticated unibody chassis of the iPhone 5 with a brand new see-through design.

3gs up close

The new chassis is reportedly mixed with plastic and metal, “with the internal metal parts being able to be seen from outside through special design”.

Fearing all this budget iPhone talk might affect sales, Apple dispatched its marketing boss Phil Schiller who told Reuters that Apple won’t “blindly pursue market share”, without explicitly denying that Apple’s been researching such a device.