Apple's Cook pessimistic on making low-cost, prepaid iPhone

Apple (NASDAQ:AAPL) CEO Tim Cook said the company is interested in making the best products possible, including iPhones, but not necessarily cheap versions of those products. Cook's comments, which echo his previous statements on the topic, appear to preclude the introduction of a low-cost iPhone specifically for the prepaid wireless market. 

apple ceo tim cook


Speaking at the Goldman Sachs Technology and Internet Conference, Cook said that emerging markets, including China and Brazil, are "critical" for Apple. However, he said that the company likely won't change its overarching strategy for designing and selling products in order to reach customers there.

"What I see is that there is a lot of commonality in what people around the world want," he said. "Everyone in every country wants the best product. They're not looking for a cheap version of the best product. They're looking for the best product."

In the past, Cook has acknowledged the importance of the prepaid market. In his appearance Tuesday, Cook noted that the company's revenue skyrocketed to $13 billion in Greater China in 2011, and that it had gotten China Unicom to pair a postpaid wireless plan with the iPhone there. "It was amazing the kind of conversion they got," he said. However, Cook noted such a strategy won't necessarily work in other markets dominated by prepaid services. 

Cooks aid Apple, which sold a record 37 million iPhones in the fourth quarter, still has a lot of room to grow in the smartphone market. He said 37 million seems like a large figure--and it was 24 percent of the smartphone market in the fourth quarter--but it's small compared with the 500 million smartphones sold in 2011. "This is a jaw-dropping industry," he said. "It has tremendous opportunity to it," noting Apple expects the smartphone market to grow to 1 billion in 2015.

Cook also touched on the company's iPad, which is widely expected to get a refresh in early March. He said that the company's 55 million iPad shipments since the product was first introduced in 2010 are "something no one would have guessed, including us." Cook noted that one of the main reasons the iPad has been so successful is that it "stands on the shoulders" of the iTunes store, App Store and content ecosystem built by other iOS devices.  

The Apple chief said the company would not compete with other tablet makers on price, but would instead focus on continuing to innovate. He also praised's Kindle Fire product, which Amazon sells for $199, but seemed to indicate that Amazon and Apple are going after two very different audiences. "Amazon is a different kind of competitor," he said. "And I think they'll sell a lot of units. I think they have and they will. But the customers that we're designing our products for are not going to be satisfied with a limited function kind of product. And I think the real catalyst to the tablet market will be innovation and pushing the next frontier."

For more
- listen to this webcast
- see this CNET article
- see this Fortune transcript

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