O'Grady's PowerPage

Tag: Eddy Cue

  • Analyst: Apple may be looking into offering lower-priced/prepaid iPhone option

    A series of comments from Apple Chief Operating Officer Tim Cook indicate that Apple doesn’t want its products to be “just for the rich” have fueled speculation that the company is interested in offering a cheaper iPhone.

    According to Forbes, Bernstein Research analyst Toni Sacconaghi met last week with Cook, Apple Chief Financial Officer Peter Oppenheimer, and Vice President of Online Services Eddy Cue. The analyst came away with the impression that Apple is “likely to develop lower priced offerings” in its handset business.

    Cook also reportedly said that Apple is planning “clever things” to compete in the prepaid handset market. He also said that Apple is “not ceding any market,” and the company doesn’t want its products to be “just for the rich.”

    Cook’s comments, and the analyst’s interpretations, come soon after two prominent publications claimed that Apple is working on a new, smaller, US$200 contract-free iPhone that it could sell directly to customers and bypass wireless carrier contracts. Both Bloomberg and The Wall Street Journal said that Apple’s alleged plans were in an effort to compete with Google’s growing Android mobile platform.

    Going against the tide, The New York Times rebuffed those two reports only days later, and said that Apple is not developing a smaller handset. However, it was reported by the Times that Apple has explored opportunities to create a less expensive iPhone.

    In his meeting with Sacconaghi, cook reportedly referred to the iPhone as “the mother of all halos,” as the handset has expanded sales of Apple’s other devices, particularly in emerging markets. Apple has long referred to sales of the iPod — and later iPhone — as having a “halo effect” that drives sales of Macs.

    And one emerging market where Apple has found great success in a short period of time is China. Cook reportedly acknowledged that Apple has spent “huge energy” in China, and also noted that it is a “classic prepaid market,” which would be an ideal candidate for a cheaper iPhone.

    The company is also said to be looking to expand its carrier partnerships. Oppenheimer said that Apple has 175 carrier partners, while rival Research in Motion, maker of the Blackberry, partners with 550 carriers.

    Cook also said he believes the tablet market will eventually be bigger than the PC market, and that competition for tablets will be even more intense than with smartphones. He also hinted that the company has interesting new things in its product pipeline.

    Finally, Oppenheimer also said that Apple’s current capital structure is not efficient. He said the company is likely to use its cash to secure supplies of key components, much like the recent secret US$3.9 billion deal Apple recently revealed it made with component suppliers.

    Stay tuned for additional details as they become available.

  • Rumor: Apple Looking Into Creating $30/Month iTunes TV Subscription Service

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    If you want additional television content over iTunes, you might not have that much longer to wait.

    Per MediaMemo, Apple has reportedly reached out to TV networks in recent weeks with a proposed US$30/month subscription plan to deliver content via iTunes — a service it hopes to launch in early 2010.

    Citing multiple sources, the article stated that Apple’s subscription proposal is not based on any specific piece of hardware, like the Apple TV or forthcoming tablet. Rather, the plan would stick with the existing iTunes desktop software.

    “Apple has told industry executives it wants to launch the service early next year,” the report said, “but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.”

    If anyone does bite, the first expected is Disney, of which Apple co-founder Steve Jobs is the largest shareholder. Disney was the first to allow its content on iTunes and saw tremendous early success.

    Kafka said that industry executives are “intrigued” by the prospect of a subscription plan on iTunes, as they are looking for new revenue streams as advertising returns diminish. However, cable networks are concerned about sacrificing existing relationships with providers like Comcast, and all content providers are worried that advertising revenue could decrease if live viewership shrinks.

    “So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch,” the report said. “Says one executive briefed on the company’s plans: ‘I think they might get it right this time.’”

    Apple has been long rumored to provide a subscription option for TV content. In August, Gene Munster, Piper Jaffray senior research analyst, said he believes that Apple would release a new Apple TV in conjunction with a subscription TV account. But the agreements necessary to offer a subscription service would take some time.

    “Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee ($30 or $40 per month),” Munster writes. “Such a product would effectively replace a consumer’s monthly cable bill (~$85/month) and offer access to current and older episodes of select shows on select channels.”

    Last week, the Apple TV software was updated to version 3.0. Improvements included a newly redesigned interface, support for iTunes Extras and iTunes LP, and streaming Internet radio.