TIM COOK: The iPhone and iPad are 'not for the rich'

Tim CookAppleApple CEO Tim Cook

Apple products are usually deservedly seen as premium. For example, the iPhone is a high-end smartphone in a world where cheap Android phones are $US100 or less.

But Apple’s CEO doesn’t see Apple’s iPhones and iPads as products exclusively for the rich.

He pointed out in an interview with Fortune published on Monday that there are iPhone and iPad models at around $US300, and said other companies have higher margins than Apple’s.

“But if you look across our product lines, you can buy an iPad today for under $US300. You can buy an iPhone, depending upon which one you select, for in that same kind of ballpark,” Cook told Fortune’s Adam Lashinsky. “And so these are not for the rich.”

“We obviously wouldn’t have over a billion products that are in our active installed base if we were making them for the rich because that’s a sizable number no matter who’s looking at the numbers,” he continued.

Cook is most likely referring to the iPad model that starts at $US329, and the iPhone SE, which is listed at $US399 on Apple’s website.

These comments in a longer interview come as Apple is expected to launch on Tuesday a new model of iPhone, likely to be called the iPhone X, that could cost $US1,000 or more, according to analyst predictions. The current top iPhone, the iPhone 7 Plus, starts at $US769.

The increased price for the top-end iPhone raises two challenges for Apple: whether consumers are ready to pay that much for a smartphone, as well as whether the presence of a high-end model may make new entry-level iPhones seem less impressive.

But Apple has been executing a new pricing product strategy for the past few years. The “Apple Tax” — the premium over similar products from other companies that you would have to pay for Apple’s design and software — has been on its way out for a while.

Now, what Apple has started doing recently is making its very high-end products more expensive, while making its entry-level products more accessible. Think about the $US20,000 gold Apple Watch, or the forthcoming iMac Pro.

So now Apple has premium products targeting a completely different part of the Apple user base than its entry-level products. This helps Apple keep its margins high, and gives it a way to crack into new markets, because when you’re as big as Apple, you need new strategies to keep growing.

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