Is Apple (NASDAQ:AAPL) making a crucial mistake by ignoring the low-cost smartphone market or is the iPhone maker actually creating more value by staying in the premium device segment? In a recent interview with Bloomberg Businessweek, CEO Tim Cook, software chief Craig Federighi, and design leader Jonathan Ive shared their unified vision for Apple as a maker of high-end devices.
Some industry analysts have urged Apple to release a lower-cost smartphone that would enable the company to seize a greater slice of the expanding cheap smartphone market. Currently this market is dominated by devices running Google’s (NASDAQ:GOOG) Android operating system. According to the latest IDC data, Android accounted for a 79.3 percent share of the smartphone market in the second quarter of this year. Apple held a 13.2 percent share over the same time period.
Although some analysts thought that the iPhone 5C might be Apple’s first foray into the low-end smartphone market, the colorful iPhone’s $550 unsubsidized price leaves it squarely in the mid to high-end segment of the market. However, Cook makes no apologies for keeping Apple’s focus on the premium smartphone market.
“There’s always a large junk part of the market. We’re not in the junk business,” Cook told Bloomberg. Instead of racing to the bottom, Cook noted that Apple will continue its focus on “a segment of the market that really wants a product that does a lot for them.”
Similarly, Ive noted that the value found in Apple’s devices can’t necessarily be summed up by one particular technology. Rather, Apple’s products convey a sense that, “somebody has cared,” Ive told Bloomberg. “New is easy. Right is hard,” added Federighi.
Cook also pointed out that Apple has consistently been able to monetize its smaller user base better than Android has been able to monetize its much larger user base. Despite the fact that Android is found on the majority of mobile devices being sold, Apple’s iOS still accounts for the majority of Web activity.
According to NetMarketShare data, Apple’s Safari browser accounted for a 55.46 percent share of the total mobile activity in August. “Does a unit of market share matter if it’s not being used?” said Cook via Bloomberg.
On the other hand, Cook admitted that the recent decline in Apple’s stock price does not make him happy. Apple’s stock price has declined over 30 percent since hitting a $700-plus peak last September. However, Cook emphasized that he will remain focused on “doing the right things,” rather than “letting somebody else or a thing like the market define how I should feel.”
Here’s how Apple has traded over the past five trading sessions.
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