Apple's Cook determined to stay the course
Coming off the best quarter in the company's history that didn't involve a holiday miracle, don't expect Apple to make major strategic changes.
The worst recession in decades has had a limited effect on the consumer electronics powerhouse that is the modern-day Apple. The company's second-quarter earnings results shattered Wall Street expectations, despite a relatively weak quarter for the Mac, the rise of low-cost Netbooks, and the strong performance of iPhone rivals such as Research in Motion's BlackBerry.
As the economic situation has worsened, some analysts and observers have opined that Apple needs to embrace low-cost Macs and additional wireless carriers to keep its economic engine running. Apple COO Tim Cook would disagree.
Cook made it very clear Wednesday that Apple believes in its strategy of protecting the Mac as a high-end, high-margin brand and slowly evolving the iPhone's distribution opportunities. When analysts pointed out that Apple lost market share in the U.S. during the quarter, and that the single most popular reason why potential U.S. iPhone customers did not want to buy the device was because it only works with AT&T, the normally laid-back Cook grew more passionate defending Apple's approach.
"Do I care about US (market) share? Of course I do, but I think cycles come and cycles go, and what we're about is about making the best computers in the world, not making the most, and not getting to a point where we're not building products we're not proud of. If we do that over the long term, we'll gain share."
Cook can't say outright that Apple doesn't care about Mac market share; one, because it isn't entirely true, and two, because his marketing team will yell at him. But to a certain extent, Apple is indifferent to Mac market share: the PC wars are over, and Microsoft won a long time ago, as Steve Jobs himself said back in 1996. Apple has long chosen to position the Mac as "the best personal computer," not the mass-market personal computer.
Still, Cook pointed out that a lot of the market share gains in the U.S. made at Apple's expense have come as the result of the popularity of cheap Netbooks, which he described as having "cramped keyboards, terrible software, and junky hardware." Left unsaid was the worst thing about Netbooks--their profit margins compared with full-size notebooks--and while Cook refused to rule out entirely the prospect of Apple releasing a Netbook, he made it sound like Apple has different ideas in mind.
"If we find a way where we can deliver an innovative product that really delivers a contribution, than we'll do that. We have some interesting ideas in this space," he said. It's not hard to imagine three or four different Netbook/tablet Mac prototypes lying around in top-secret Cupertino labs as Apple experiments with the right combination of usability, style, and profit before taking the plunge.
Likewise, Cook reiterated Apple's commitment to AT&T as the exclusive iPhone partner in the U.S. Some Apple watchers have called for the company to expand its partners inside the U.S., as concerns about the performance of AT&T's network have grown.
"We view AT&T as a very good partner, and believe they are the best wireless provider in the U.S.," Cook said. "We do not have a plan to change the iPhone relationship."
Contrary to public statements from Verizon, which has said it rebuffed a chance to carry the iPhone over the control that Apple wished to retain over the device, Cook said "we chose from the beginning of the iPhone to focus on one phone for the whole world. And when you do that, you go down the GSM route." Verizon has said it plans to join the GSM companies (AT&T, T-Mobile) in moving to the LTE standard in the future, which would allow Apple to theoretically ship a Verizon iPhone, but that conversion is not expected to be ready for years.
But there is one potential iPhone strategy shift that could be coming later this year, perhaps around the time Apple is ready to ship an expected next-generation handset and the iPhone 3.0 software, a shift first hinted at by CEO Steve Jobs last October.
On Wednesday, Cook echoed Jobs' comments about iPhone pricing by saying "one thing we'll make sure is that we don't leave a price umbrella for people." A price umbrella is a term used to describe the effect a dominant company can have on a particular market with a popular-yet-expensive product: competitors can enter the market with other products at lower prices and gain customers just based on affordability, buying those companies time and profits to use in order to make their product better.
That's the second signal in the last six months that Apple thinks a $199 iPhone creates a price umbrella that gives rivals room to operate and restrict Apple's ability to gain market share. Unlike the Mac business, Apple very much cares about its iPhone market share, and as RIM co-CEO Jim Balsillie has noted, the mobile-computing industry is still in "land-grab" mode in its early days.
So, perhaps that's one shift in Apple's thinking over the last six months: the need to release a cheaper iPhone. With the Palm Pre set to make its debut this summer at a yet-to-be-announced price, and BlackBerry sales continuing to improve, Apple will need something to keep the iPhone going heading into its third year. Cook has said before that iPhone sales have increased every time Apple has lowered the price.
This was a big quarter for Apple. The company appeared to skate through a holiday season that left rivals shaken on the strength of its iPod division and retail group, and it wasn't at all clear that strength could continue. But while both Macs and Apple Retail took hits during the last three months, Apple continues to put up some of the most impressive numbers in the tech industry amid one of the worst downturns in tech history.
If it ain't broke, don't fix it.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
It would be more than what most current netbooks are, but a more portable and space consciousence system than Apple currently makes (even an AirBook is kind of big on an airline or crowded train).... and having more than a few hours of batter life is critical if running from meeting to meeting all day, or a student taking notes in many classes. If such a machine existed... I'd sell my Macbook Pro and buy a it and some kind of desktop for the heavy lifting.
There is considerable room around the keyboard, especially its depth (which is the main problem on airlines, etc.). Reduce the width a bit if possible, reduce the depth quite a bit. I'd generally prefer uniform thickness for something like this... and use the space for battery if nothing else.
I realize the Air is kind of their netbook... it just misses the mark in several ways (for example, even if it were acceptable to have that size, it should use lower power CPUs).
1. MacBook Air - the perfect netbook.
2. iPhone - the pocket netbook with cell phone.
3. iPod Touch - the pocket netbook for everyone including 3 y.o. kids.
iPhone and iPod touch are not netbooks what is so damn hard to understand about that.
What's so damn hard about viewing it as a matter of perspective. You may not understand it or give three cents about it, but for some people, the iPhone and Touch suit their needs all the same (when compared to some netbooks). Now make sure you get plenty of sleep before school tomorrow. Trolling takes no day off and you want to be well rested.
While not having a traditional netbook shape, physical keyboard, or Windows/Linux OS my iPhone is just as effective as a mobile computing platform as any traditional netbook with a couple of exceptions - because my iPhone is smaller and fits in my pocket it is always with me while people I know with netbooks only have them when the have their office bag with them and at other times they leave it at home because it is not portable enough.
Another difference is that most people who have iPhones love them while a high portion of netbook owners complain about them (and return rates are high)
Oh, did I mention that bwesides all that other netbook-type stuff that I do on my iPhone I also make phone calls and use SMS too.
Love my iPhone - so long as I have it a traditional netbook is totally unnecessary for me.
An iPhone is not a netbook. period. Have you ever tried typing a paper on your iphone? How about putting a 160 GB hard drive in it, or 2-3 USB ports? Plus, consider how many of the features are contingent on the 70 per month usage fee, which you don't get with any netbook.
Of COURSE the iPhone is a really useful phone that goes above and beyond what a lot of people thought was possible in a phone. I'd even say that its the most revolutionary phone to come out in the last five years.
But people complain about browsing for long periods on a 9-10 inch netbook - you're trying to say that you have no problem only browsing on your iPhone screen? Bottom line, an iPhone could never be your primary computer, but a netbook potentially could.
And it might be apple's decision not to release a netbook for whatever reason - maybe its that it can't make it profitable or it wants to keep a 'premium' brand label. Obviously, as this article is all about, its not exactly hurting them. But its insane to say that a MacBook air, with a 2000 price tag, an iPhone, or an iPod touch is a netbook.
it isn't cheap enough to be one
netbooks are sub $500 ultraportables
the air is a "regular" ultraportable with a hefty price tag to match
If Apple really wanted to win the PC war they could. All they'd have to do is license OS X to PC vendors but that would be to simple.
Er, no. The great thing about Microsoft is that they have a huge platform in Windows that suites businesses and Apple cannot really compete with that simply by licensing OS X. Certainly you couldn't replace a large company's Windows infrastructure with one from Apple. Rather, Apple is more content to make their systems play nicely in a Windows environment (possibly to make them as trojan horses) instead of trying to take on Windows directly.
Certainly the licensing of OS X would help make the Macintosh platform more attractive to business since you could have individual suppliers competing for your computing budget, plus continue to get computers that would work with your environment if one went out of business. However, this is far from all that is needed for the Macintosh platform to succeed on a large scale and I really don't think that Apple is interested in attempting to do this. When you are making huge profits, particularly when compared to the rest of the industry, what incentive is there to change?
P.S. In my opinion a netbook is more than a smaller laptop, it's also in the sub $400 range.
Flame on people!
(sigh) Has Apple not learned anything over the last 20 years?? It is this type of thinking that will always relegate Apple to a niche role in computing. Very disappointing.
Is it small wonder why HP Pavilion desktop machines continue to do well? I use an HP Pavilion a6400f and HP did a masterful job integrating all the included software so it doesn't interfere with system operation, not bad consider all the complaints about too much software preloaded from PC manufacturers.
my intention.
ATT stinks!
The MacBook Air is a net book, but too big to really be a net book. Apple could produce a killer net book and that would sell. The beauty of a net book is that you don't need much platform compatibility, so the included Apple apps would be more than enough for most people. They are really missing out on a niche market that they could fill very well.
I like OSX, I really do. However it is part of a package, hardware and software. make it hardware independent and we have a fair comparison.
However this will never happen, Apple are firmly committed to their marketing plan. They are niche, will always be niche and will always have to rely on "style" to survive.
Truly there is nothing innovative about any of their consumer products...beyond "style" they market very well. The moment they cease to do so..they lose.
They will never license as long as anyone intelligent is running the company, because that would ruin OSX as an OS rather quickly... look at Windows.
As for 'niche'... as Jobs is fond of saying, then BMW is a 'niche' auto-maker too. What does that have to do with anything?
Nothing innovative? Maybe you should look at Apple's history.... while they didn't invent all these things, they certainly made them popular: GUI, Mouse, Laser Printer, PDA, Laptops (to a large extent), Digital Camera, Wireless (at least made popular - Airport), On-line music purchase, On-line TV - video purchase, Made USB popular, Got rid of floppies...
BTW... people have been predicting Apple's demise for decades now... take a look at the recent financials for M$ and Apple.
if history is any suggestion ........
Well there went a whole blog out the window...
Someone mentioned Porsche and they are a niche player. Also Apple are a hardware and software company and if you actually get your brain gear are the only company who provide both.
- by lakorai2 April 25, 2009 3:08 PM PDT
- Hey if you really want a Mac and don'[t want to get ripped off from Apple, use EFI-X. Run Mac OS X, get less of the Apple Tax. Actually have an upgradable computer.
- Like this Reply to this comment
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(35 Comments)For laptops running a Core2Duo cpu and an intel chipset or the 9400M chipset you could always go with Boot 132, at least until EFI-X releases a module for laptops.
Apples crap is too expensive. That opinion is pretty well accepted. They don't want to go cheap; not because of quality, as we have seen Apple's quality lately hasn't been steller. Maybe it's the illusion of quality behind the veil of marketing..... Check Macfixit.com for major issues on many iMacs, Macbooks with staining plastic, oissues with the Radeon 4850 iMacs freezing/overheating etc.
Apple is about marketing, margin and creating an elitist image. I run OSX using EFI-X. The OS is great and has lots of potential. I don't have to deal with Apple's facist lock-in on their products, soldering cpus, soldering batteries, overpriced laptops etc. Their business model prevents more profit from being created as Apple could easily compete with Microsoft if they opened up their platform.