Apple's Cook hints at prepaid iPhone, shaking up handset distribution

Apple (NASDAQ:AAPL) COO Tim Cook hinted the company might produce a cheaper version of its popular iPhone and also indicated that Apple is interested in shaking up how handsets are distributed worldwide.

Sanford C. Bernstein analyst Toni Sacconaghi recently had a meeting with Cook, CFO Peter Oppenheimer and Eddy Cue, Apple's vice president of Internet Services, and relayed his takeaways in a widely reported research note. Specifically, Cook said Apple is trying to "figure out" the prepaid wireless market and is trying to ensure that its products are not "just for the rich" but "for everyone."

Recent reports have indicated that Apple is working on cheaper version of the iPhone. Sacconaghi told the New York Times earlier this month that a cheaper version of the iPhone could held grow Apple's sales of the gadget sixfold. Cook, who is handling day-to-day operations while CEO Steve Jobs is on medical leave, said that Apple "understood price is big factor in the prepaid market" and that the company was "not ceding any market."

Cook also said Apple has spent "huge energy" in China, which is a "classic prepaid market." Cook noted during Apple's fiscal first-quarter earnings conference call that Apple had $2.6 billion in sales in its most recent quarter in mainland China, Hong Kong and Taiwan, a fourfold increase from the year-ago period.

Most interestingly, Cook said the wireless industry's current method of selling handsets is poorly constructed, and that Apple will try and "innovate" and provide "clever" solutions to the market. Apple has been rumored to be working on a dual-mode phone that will work on both GSM and CDMA networks as well as an integrated SIM card that would let iPhone users pick from a variety of GSM networks without having to switch out SIM cards. Indeed, a recent look into the Verizon Wireless (NYSE:VZ) iPhone revealed a Qualcomm (NASDAQ:QCOM) modem that can support CDMA and GSM networks.

Finally, on a somewhat bizarre note, Cook said that the iPhone ranks just below food and water on psychology professor Abraham Maslow's hierarchy of needs.

For more:
- see this WSJ blog post (sub. req.)
- see this Forbes blog post
- see this BusinessInsider blog post

Related Articles:
NYT debunks petite iPhones
Rumor Mill: Smaller, cheaper iPhone in the works
Small crowds greet Verizon's iPhone
Apple surges to record revenue, iPhone sales in Q1

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