On the topic of innovations, the Apple rumor mills quickly picked up the often-repeated whispers of a cheaper iPhone. Cook neither dismissed nor confirmed the rumor, instead insisting that Apple’s “north star” has always been great products. This mantra, according to Cook, means that Apple is looking at ways to make cheaper products without sacrificing quality. Cook’s example of this unwillingness to lose quality was to bring up the iPad. Critics had long asked Apple for a MacBook with a price tag below $1,000. After concluding that the company would be unable to make that happen, Apple created the iPad, he says.
The Wall Street Journal reported in January that Apple has, indeed, been working on a cheaper iPhone since 2009. However, the company could still discard the idea. One reason for dropping the plans could be the possible effect of a cheaper iPhone on the company’s profit margins.
“A less-expensive iPhone risks crimping the company's profit margins, which executives have been loath to sacrifice. Even small changes in margins often sway investors,” says WSJ’s Jessica E. Lessin.