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Ex-CEO Sculley says Apple needs to focus on cheaper iPhone

John Sculley tells Bloomberg Television that the iPhone maker needs to revamp its supply chain to make cheaper smartphones.

Apple's iPhone 5.
Former Apple CEO John Sculley says the company needs to focus on making a cheaper iPhone.

As rumors resume that Apple is readying a less expensive iPhone, one of Apple's former chief executives believes the company needs to revamp its supply chain to meet demand for cheaper smartphones.

As developed nations hit the smartphone saturation point, Apple will have to turn its attention to customers in developing nations who can't afford high-end handsets, John Sculley said today in an interview with Bloomberg Television.

"Apple needs to adapt to a very different world," said Sculley, who served as Apple's chief for 10 years in the 1980s and '90s. "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."

Sculley's comments come a week after the Wall Street churned up the recurring rumor with a report that Apple was developing a low-cost version of its flagship iPhone -- presumably aimed at the developing world -- that would launch as early as this year.

Saying that there was "nothing wrong" with the iPhone 5, Sculley also said Samsung had closed the gap in regards to smartphone features.

"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."

Shipments of Samsung's Galaxy S3 edged out Apple's iPhone 4S in the third quarter to become the world's most popular smartphone model. According to figures released by research firm Strategy Analytics in November, the Galaxy S3 commanded 10.7 percent of the global smartphone market in the third quarter compared with 9.7 percent for the iPhone 4S. The newly released iPhone 5 held just 3.6 percent of the global share.