Phil Schiller says Apple won't build a "cheap" iPhone

Posted by Trent Nouveau

Apple exec Phillip Schiller has responded to reports that Cupertino is planning to launch a contract-free iPhone at a significantly cheaper price point than its current handset lineup.

According to Schiller, basic "feature" phones were initially popular in the Chinese market, while "cheap" smartphones are currently the most successful. However, he says, Apple isn't interested in producing a cheap handset.

Phil Schiller says Apple won't build a "cheap" iPhone

"Despite the popularity of cheap smartphones, this will never be the future of Apple's products," Schiller told the Shanghai Evening News.

"In fact, although Apple's market share of smartphones is just about 20 percent, we own 75 percent of the profit."

As AppleInsider's Katie Marsal points out, Schiller's comments are by no means a guarantee that Cupertino won't ultimately decide to manufacture an entry-level smartphone at a cheaper price point.

"[Remember], the company famously panned smaller, less expensive tablets before releasing the iPad mini last October," she noted.

If Apple was to release a cheaper iPhone, Piper Jaffray analyst Gene Munster believes it would allow the company to address the 65% of the smartphone market it currently doesn't serve.

"We believe that the high-end smartphone market (above $400 USD off contract) for [calendar year 2013] will be about 320 million units, of which we believe Apple will capture 50% market share," Munster opined in an investors note obtained by AppleInsider.

"We believe this means Apple is missing the other 65% of the market, or 580 million units, given its current product lineup without the lower priced phone. "We believe the opportunity for Apple is too large to miss, as the low end market is growing significantly faster than the high end smartphone market."