Apple Won't Compromise, Cook Declares
Coming off its best March quarter yet, Apple Inc. (Nasdaq: AAPL) is feeling really confident about its mobile device strategies -- so much so that it's not going to dabble in convergence for the iPad, nor is it concerned that wireless operators may cut their iPhone subsidies.
"We just reported our most amazing March quarter Apple has ever had; we feel very good about our business and our product pipeline," Apple CFO Peter Oppenheimer said on the call. (See Apple Earns $11.6B on Q2 iSales and Apple Reports $39.2B in Q2 Revenue.)
That product pipeline won't include any hybrid devices. When asked about the trend toward converging the PC and tablet experiences, like Microsoft Corp. (Nasdaq: MSFT) is looking to do by putting Windows 8 on both devices, Apple CEO Tim Cook said that putting together two products would compromise both and displease users.
Cook explained that anything could be converged, such as a toaster and a refrigerator, but that doesn't mean they should be. The tablet market is huge, he said, and iPads offer so much to a broad swatch of users.
"The compromise of convergence -- we're not going to that party," he said. "Others might from a defensive point ... but we're going to play in both."
Calling carriers' bluff
That no-compromise attitude goes for iPhones too. Speculation of the wireless operators putting the squeeze on smartphone subsidies drove Apple's stock down before its earnings today (in fact, it fell every day for a week leading into Tuesday's earnings). But Apple will stay focused on building its smartphone, and carriers will want to provide the product their customers want to buy, Cook said. (See Sprint Talks iPhone Subsidies, LTE Devices and Do Big Subsidies Have Big Staying Power?)
"From the carriers' perspective, it's important to remember the subsidy is not large relative to the payments across the [24-month] contract period," he added. "Any delta between the iPhone and another phone is even smaller."
Cook also talked up the iPhone's advantages that will have the carriers staying put, namely that it results in lower churn than the competition does and Apple's engineers make it efficient with data use, more so than others using an "app-rich ecosystem." He added that the "iPhone is the best smartphone on the planet to entice the customer who is currently using a traditional mobile phone to upgrade to a smartphone."
Settle or battle?
One place where Apple is willing to compromise is the courtroom. Cook said he hates litigation and simply wants people to invent their own stuff. (See Apple vs. Android Patent Spat Goes Global.)
"If we could get some arrangement where that's the case, I'd highly prefer to settle than battle," he said. "It's very important that Apple not become the developer for the world. We need people to invent their own stuff."
— Sarah Reedy, Senior Reporter, Light Reading Mobile