Apple feels no need to offer lower cost iPhone, says analyst

Apple seems to have no desire to sell cheaper smartphones, says a report out yesterday from Citigroup technology analyst Richard Gardner.
Meeting with Apple CEO Tim Cook and Chief Financial Officer Peter Oppenheimer yesterday, Citigroup analysts discussed a variety of topics with the two executives, notably the smartphone market
.
Asked about the sustainability of Apple's average selling prices and margins for the iPhone, Oppenheimer suggested that the company will keep focusing on producing "great products," believing that customers are willing to pay a bit more for them.
"We did not get the impression that Apple feels a burning need to move down-market in smartphones, but rather that the company believes consumer preference will continue to gravitate toward the more capable devices that Apple currently produces," said the report.
Cook also repeated his belief that innovation in iOS and other mobile platforms will help tablets eventually surpass PCs in sheer volume, a notion the CEO advanced last year when he was still Chief Operating Officer. Apple's management pointed to the success of its IOS platform for the development community, noting that developers have earned $4 billion to date and $700 million just in the fourth quarter of 2011.
With Windows 8 ARM tablets slated to hit the market this year and laptops expected next year, the Citigroup analysts wondering about the possibility of an ARM-based MacBook Air. But that doesn't seem to be in the cards.
"We walked away from this meeting with the impression that Apple feels iPad satisfies--or will soon satisfy--the needs of those who might have been interested in such a product," the report noted.
Onto another subject, Cook spoke about iCloud as a "strategic shift" similar in importance to Apple's "PC as the digital hub" notion around ten years ago. As such, he pointed to iCloud as key to bringing in new customers and keeping them once they're on the new cloud-based platform.
Eyeing Apple TV, Cook again referred to it as a "hobby" as he did last week at the company's earnings announcement. But he delved further by saying that the lack of TV content and the selling rather than renting of TV shows on iTunes could stall Apple's grasp of this market. Further, an Apple TV or Apple-branded TV is unlikely to move past the "hobby" stage unless the company could reach across multiple cable carriers and across multiple regions.