Sculley to Cook: Time to Revamp iPhone Supply Chain

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Former Apple CEO John Sculley thinks it's time for Apple to rework its parts supply chain to reduce the cost of the iPhone. He sees iPhone costs as a weakness for Apple, and while he endorses Tim Cook as the company's CEO, he apparently thinks the master of the supply chain needs his advice.

"Apple needs to adapt to a very different world," Mr. Sculley told Bloomberg. "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."

Sculley to Cook: Make the iPhone cheaper!Sculley to Cook: Make the iPhone cheaper!

He added that the differences between the iPhone and Samsung's Galaxy smartphones aren't as great as they once were, implying that it's time for Apple to compete on price instead of quality and features. "Samsung is an extraordinarily good competitor," he said.

Mr. Sculley is offering his unsolicited advice to the man that crafted Apple's current supply chain process, and who now runs the entire company. While Mac sales did dramatically increase during Mr. Sculley's tenure, he's also the CEO that forced Steve Jobs out of the company, created an amazingly complex and expensive product lineup, and eventually saw dramatic declines in Mac sales, profits and stock value before being forced out himself.

Despite Mr. Sculley's concerns, Apple's iPhone seems to be doing well in the market, and the company is drawing in the lion's share of smartphone profits worldwide.

Mr. Sculley isn't, however, alone in his thoughts on lower priced iPhones. Strategy Analytics executive director Neil Mawston thinks an "iPhone Mini" is coming to compete with cheaper smartphones from companies like Samsung, and rumors claiming a low cost iPhone are coming have been circulating, too.

Apple senior vice president of worldwide marketing Phil Schiller recently shot down the idea of cheap iPhones stating, "Despite the popularity of cheap smartphones, this will never be the future of Apple's products. In fact, although Apple's market share of smartphones is just about 20 percent, we own the 75 percent of the profit."

While Mr. Sculley's advice to Mr. Cook may have come with the best of intentions, there isn't much chance Mr. Cook will be taking it seriously.

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Comments

Aftermac

That sounds remarkably like the thinking that caused the Mac to stagnate for a decade and let Microsoft catch up.

Lee Dronick

No kibitzing

Sy

Has anyone compared the costs of a Galaxy SIII to an iPhone 5?  I bet the costs are similar.  It’s just that Samsung is willing to take lower margins.

aardman

As someone who did not run Apple to the ground, I think any unsolicited advise that I have for Apple would be more credible than anything Sculley says.

Furthermore, people who are recommending that Apple sell a low cost iPhone have to answer the following question:

What features will this low cost iPhone have so that . .  .

1) It’s not too similar to the premium iPhone that it kills the premium iPhone market (e.g. Windows PC, which can’t sustain a significant market for premium machines), and

2) It’s not so gimped as to become a joke that nobody buys.  (e.g. IBM PC Jr, netbooks, and possibly Surface RT)

Answer this question and you’ve made the case for a low cost iPhone model.

Winski

FIRE SCULLEY AGAIN - IMMEDIATELY.

skipaq

To think that it isn’t even April 1. It isn’t Mac, iPod, iPhone or even iPad that is going to provide the next advance in Apple’s business. It is a product that we don’t know about. Why would Apple put any great effort to become a low price vendor of phones? It would be contrary to all that they are and a distraction from where they need to go next.

CityGuide

Mr. Sculley, put down the sugared water and listen carefully: Quality doesn’t come cheap.

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