Former Apple CEO Sculley encourages Apple to make a cheaper iPhone

Former Apple (AAPL) CEO John Sculley may not seem like a good person to offer Apple advice, especially since he’s widely blamed for pushing Steve Jobs out of the company in 1985 and for making a series of mistakes during his tenure that left Apple in a precarious financial position. All the same, Sculley recently told Bloomberg that Apple should go ahead and make a cheaper version of the iPhone to compete with companies such as Samsung (005930) in emerging markets.

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“Apple needs to adapt to a very different world,” Sculley said. “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.”

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According to Sculley, the big problem for Apple isn’t so much that its own smartphones have gotten worse but that its rivals have done a good job of catching up over the past couple of years. So while the iPhone was the only game in town for people who wanted a top-notch touchscreen smartphone four years ago, rivals such as the Galaxy S III are now providing similar quality and are eating into Apple’s market share. And when you couple this with the fact that Samsung also has a very strong strategy for selling lower-cost smartphones in emerging markets, then you can understand why Apple may want to develop a cheaper smartphone of its own.

“Samsung is an extraordinarily good competitor,” Sculley said. “The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.”

This article was originally published on BGR.com