Apple's fourth-quarter earnings conference call was made a bit more lively due to its unusual guest star: CEO Steve Jobs.
It's not unprecedented for Jobs to sit in on one of Apple's earnings calls, usually handled by COO Tim Cook and CFO Peter Oppenheimer, but it certainly is very rare. Jobs said he jumped on the call to help explain Apple's decision to shed a little more light on the contribution the iPhone makes to his company's finances, although there's probably more than one reason why he chose Tuesday to make his appearance.
The iPhone figures are certainly astonishing, and gave Jobs an opportunity to crow about the success of his baby: the company sold more iPhone 3Gs in its fourth fiscal quarter than all the iPhones sold to date. But Apple has been plagued this year by consistent speculation over Jobs' health following his public appearances and the inability of some blowhards to believe that because Apple has not shared a succession plan with the media, it must not have one. In addition, in case you hadn't noticed, this isn't the healthiest economy we've ever seen.
In any event, Jobs has a tendency to speak a bit more freely about Apple and its fortunes than anyone else inside the company, perhaps because he is the only one he has authorized to do so. Here's a selection of Jobs' comments, and some context for each.
"We may get buffeted around by the waves a little bit, but we'll be fine, and stronger when the waves recede in the future."
Jobs made several comments urging caution regarding the economy but stopping short of providing any doom-and-gloom assessments with comments like, "your next-door neighbor can predict (the health of the economy) as accurately as we can." But he noted that Apple's huge cash pile could help it ride out any difficulty: "I think this economic environment may present some opportunities for companies that have cash."
He also thinks Apple has unique customers, at least as compared to the competition. "I wouldn't trade our customers for any other customers in the world. We have the smartest, most product-aware customers in the world, and while they might postpone purchases in hard times, they're not going to abandon us. (They'll) delay (rather) than switch."
Regarding Apple's overall business, Jobs made the observation that October and April are Apple's "foggiest" months of the year, and generally represent the slowest times for the company, which was an interesting tidbit. He also jokingly embraced a financial analyst's suggestion that Apple use its cash horde to go on a hiring spree: "I think the 'hiring every engineer in Silicon Valley' is a good idea though."
"We choose to be in certain segments of the market and we choose not to be in certain segments of the market."
Jobs received a few questions about Mac pricing during the call. Some analysts had expected Apple to cut the prices of the Mac more severely than it did last week, and wondered if perhaps the economic conditions might drive people to purchase cheaper PCs than Apple offers.
He didn't appear to be too worried.
"What we want to do is deliver an increasing level of value to these customers, but there are some customers which we choose not to serve. We don't know how to make a $500 computer that's not a piece of junk; our DNA will not let us do that. We've seen great success by focusing on certain segments of the market and not trying to be everything to everybody, and you can expect us to stick with that winning strategy."
Later on, he pointed out that Apple is still a relatively small player in its Mac and iPhone businesses, which are currently growing at the fastest rate. "I think there are still a tremendous number of customers that we don't have in the Windows world or in the 99 percent of the phone world who would like to or can afford to buy Apple products."
"I think we have to be the best, and I think we have to not leave a price umbrella underneath us."
Get ready to see a cheaper iPhone in 2009, if my reading of the tea leaves inside one of Jobs' comments is correct. He was asked what Apple had to do to maintain its success with the iPhone into 2009, given that its competitors are gunning for the company with their own versions of touch-screen phones run by sophisticated operating systems.
With the price umbrella comment, Jobs was referring to the effect that a dominant-but-expensive product can have on competition over time: new entrants find they can get a foothold by underpricing the established competition, then improving their product over time at that lower price. While it's perhaps a bit presumptuous to assume the iPhone has already had that effect, Jobs is saying that Apple has to be careful to not let other phone makers swoop in with products that might not be as good as the established product at first but are good enough to get customers used to paying less for smartphones. That probably had something to do with the company's decision to embrace the standard subsidized mobile phone pricing strategy with the iPhone 3G.
That means Apple could have a cheaper iPhone on tap, or perhaps a "defeatured" version such as the much-rumored iPhone Nano in the mix for 2009 that would lower the price of acquiring an iPhone ever further, and give companies like Research In Motion, Nokia, and Motorola less wiggle room on pricing. "We have a great partner in AT&T, and together I think we're both very committed to making the iPhone a great value for customers," Jobs said.
"I wasn't alive then, but from what I've heard, Babe Ruth only had one home run. He just kept hitting it over and over again."
Don't expect to see the iPhone 2000 series, the iPhone 4000 series, and the iPhone 6000 series, however. Jobs chose the above analogy to answer a question about whether or not Apple needed to have a diverse lineup of iPhones to appeal to the wide variety of tastes people have in mobile phones. Companies like Nokia have dozens of slightly different versions of essentially the same phone.
"The traditional game in the phone market has been to produce a voice phone in a hundred different varieties. But as software continues to be the differentiating factor in this market, presenting a hundred different varieties to developers isn't good. We approach it as a software platform company, which is pretty different from most of our competitors," Jobs said.
"We're not likely to make this a recurring event. Peter and Tim do such a good job, I'm not sure I could add much."
I wouldn't hold your breath waiting for Jobs' next appearance on one of Apple's earnings calls.