Tim Cook on price
“I’m not convinced people want to watch movies on a tiny little screen.”
- Steve Jobs , 2003
"We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that."
- Steve Jobs, 2008
"While one could increase the resolution to make up some of the difference, it is meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one-quarter of their present size. Apple has done expensive user testing on touch interfaces over many years, and we really understand this stuff.
There are clear limits of how close you can place physical elements on a touch screen, before users cannot reliably tap, flick or pinch them. This is one of the key reasons we think the 10-inch screen size is the minimum size required to create great tablet apps."
- Steve Jobs, 2010
"There’s always a large junk part of the [phone] market. We’re not in the junk business.”
In one sense, Apple has always been very clear about how it approaches product pricing. Steve Jobs put it pretty clearly in the video below. Apple is not about expensive products - it is about refusing to make a product that has a bad experience in order to hit a price point.
But if Apple can make a good experience at a low price, it will. The iPad is a $500 computer, just not a netbook (and indeed it killed netbooks). And the clearest expression of this was in the iPod, whose price evolved a lot over time.
None of these products were junk, but some of them were cheap. Much the same applies to the phone business today. You can buy a $45 2G Android phone that's pretty much junk. You can buy a $150, 3G one that's not that bad. But you can spend $3-400 and get one that isn't remotely junk. And that's a big step down from the 5C.
There's not necessarily a margin issue here, either. Phones at this price point can get a gross margin in the same ballpark as the iPad Mini (30%+). It's worth pointing out (if only for those claiming there's no profit to be had at lower prices) that Nokia used to achieve 25% gross margins on phones with an ASP of €40.
Hence, I see Tim Cook's comment that he's not interested in the 'junk' market as somewhat less informative than it might appear. Apple has never been in the junk market, but it has often cut its entry prices. Rather, he's being disingenuous - it's what Steve would have wanted.