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Former Apple CEO Speaks on Cheaper iPhone's Importance

Former Apple CEO John Sculley believes a cheaper iPhone is pivotal for the technology giant's future.

The former-executive said in an interview with Bloomberg Television that Apple will have to start focusing on customers residing in developing nations who can't afford high-end handsets, which especially rings true for Apple's premium-priced products.

"Apple needs to adapt to a very different world," said Sculley, who was Apple's CEO for 10 years in the 1980s and '90s. "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."

Stressing that there was "nothing wrong" with the iPhone 5, Sculley said Samsung has now closed the gap pertaining to smartphone features. "Samsung is an extraordinarily good competitor. The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see."

The South Korean technology conglomerate was named the worldwide cell phone market leader during 2012 and has also dominated the mobile market in the United States. Its Galaxy S line of smartphones has sold over 100 million units since the original's launch less than three years ago, with the company expecting to announce a record profit of $8.3 billion for 2012's fourth quarter.

Sculley's comments come after Wall Street Journal's sources said Apple was developing a low-cost version of the iPhone, as well as being told that the company is halving its production for the iPhone 5 due to weakened demand.

Although Apple marketing vice president Phil Schiller said the company will never offer a cheap iPhone, a budget variant of its flagship device is expected to generate upwards of $6.5 billion in revenue.

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