Former Apple CEO Sculley's Revenge: A $25 Phone

John Sculley was a highly successful CEO at Apple, and is often unfairly blamed for its downturn after Steve Jobs was pushed out of the company in 1985.

Sculley constantly (and unsuccessfully) fights against the false notion that he was somehow responsible for the Apple malaise in the mid 1990s. Listening to a British podcast called The Two Techies made me quite mindful of the false impression of Apple's actual history. One of the hosts said that the company was going downhill when Steve left in 1985. His partner said that it just got worse when Sculley took over. The opposite was true.

This reflects the state of modern tech reporting, a reliance on myths, memes, and folklore. The fact is, in the years Sculley ran the company, revenues went up 10 fold from $800 million to $8 billion. It was his replacements, Michael Spindler and Gil Amelio, who oversaw the great downturn at Apple.

Sculley has complained about this misconception, but to no avail. He states his case clearly and nobody listens. I think that Steve Jobs, who was not happy about being ousted, managed to poison the well regarding Sculley and that was the end of the story. Sculley was the bad guy. Facts do not matter.

Unbeknownst to most of the American public, Sculley, who is generally regarded as a marketing genius, has set up shop a phone manufacturing company in India and South Asia called Obi Mobiles. The cheapest of its phones is less than $75 unlocked. His line includes a loaded-to-the-gills 8-core stunner that compares favorably with just about any phone available from Nokia, Samsung, or Apple, for that matter. This dual SIM phone is top-of-the-line—and sells for around $150. Running Android 4.4.2 with an 8-megapixel camera, it's pretty much all you need in a smartphone.

It is missing some sensors (such as the magnetometer, compass, barometer, and the gyroscope), but it does have everything else, including GPS. Sculley, discussing these phones on France24 TV, said he is not competing with Apple in any way; he described the iPhone as a high-end luxury product, which is marketing code for "over-priced."

I can tell what Sculley is thinking. The iPhone, hell, the entire market for functional smartphones, cannot maintain itself as fashion items when they become indistinguishable from each other, especially when people put cases on the devices, as most do. If you have to ask "Is that the new iPhone?" it loses its iconic power. It should be immediately identifiable. You should not have to ask.

The other thing he noticed (a lot of people have noticed) is that the Android OS is subversive and changes the math insofar as handset development is concerned. Once Apple figured out what was going on, it fired Google's Eric Schmidt from its board. Microsoft stayed clueless and decided to do an unnecessary third OS for these phones.

While Obi itself may not undermine iPhone, cheaper devices with similar functionality is in itself a threat to Apple. Obi is the fastest growing phone in India. At some point people are going to realize that a smartphone should be cheaper than it is. It's all chips with no moving parts, it is subject to Moore's Law. The obvious trend: smartphones will be more powerful, but cost $25 in the next few years.

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Ex-Apple CEO Sculley Backs Cheaper iPhone

Whether Obi is Sculley's revenge remains to be seen. But note that Sculley, like Jobs, was also ousted by the Apple board. Only he wasn't invited back. Sculley had to be annoyed when Apple bought Steve Jobs's NeXT Computer. Now it is Sculley's turn to get some free money.

In any market where fast growth forces the commoditization of the product itself, high-end and luxury versions become a very small niche. That's the iPhone. And "very small-niche" does not match well with Apple's growth plans. Something has to give.

Apple or Microsoft must buy up these companies before it is too late. But even if Apple buys Obi along with Sculley's elaborate distribution network, the price of these phones will continue to fall anyway.