John Sculley: Apple’s System Needs Fixing

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By Aabha Rathee | January 16, 2013 6:12 AM EST

Wall St. Cheat Sheet

A cheaper iPhone may have become a necessity, but . And there, a premium priced smartphone will just not work in the face of cheaper, similarly functional devices from Google ( fell to the lowest price in 11 months on Monday after news reports that it had cut back on production of the iPhone 5 after seeing weaker-than-expected demand. Several of Apple Asian suppliers, including Sharp, also declined after the reports. Slower iPhone demand “will inevitably have a negative impact on component suppliers,” Tong Yang Securities  Park Hyun told Bloomberg. “The center of growth in the market is moving toward the mid-end segment.”

Sculley specifically mentioned the increasing levels of threat from devices such as Samsung’s (SSNLF.PK) Galaxy S series. “Samsung is an extraordinarily good competitor,” he said. “The differentiation between a Samsung Galaxy and an iPhone 5 is not as great as we used to see.”

The former chief did express confidence in current Tim Cook, who was speeding up the company’s product cycle to twice a year. Cook is “exactly the right leader” because of his supply-chain expertise, Sculley said.

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