Steve Jobs made an unusual appearance on Apple's earnings call today. The reason?
"I couldn't help dropping by for our first $20 billion quarter," he said, by way of explanation. But the real reason soon became clear: to deliver a very pointed message to Google, Research In Motion, customers, developers, and competing smartphone and tablet makers. It had been two years since his last earnings call appearance.
Here's an edited transcript of his comments (a recording of Jobs' comments during the call is available at YouTube):
"First let me discuss iPhone. We sold 14.1 million iPhones in the quarter...it handily beat RIM's 12.1 million BlackBerrys sold for their most recent quarter. We've now passed RIM, and I don't see them catching up with us in the foreseeable future...I think it's going to be a challenge for them to create a competitive platform and convince developers to create apps for it" after iOS and Android.
Next, he moved on to current nemesis Google:
"Last week Eric Schmidt reiterated that they are activating 200,000 devices per day and have around 90,000 apps" in their app store. Apple has activated 275,000 devices per day on average, with a peak of 300K devices on some of those days. Apple has about 300K apps in its App Store."
"There's no way to know how many Android phones are shipping each quarter," he said, though he cited Gartner's estimation of 10 million in the June quarter.
"Google loves to characterize Android as open and iOS and iPhone as closed. We find that a bit disingenuous and clouding the difference between our approaches," Jobs said. "Unlike Windows, where most PCs have the same user interface and run the same apps. Many Android OEMs including the two largest, HTC and Motorola, install (custom) user interfaces to differentiate themselves...Compare this with iPhone, where every handset looks the same."
"Twitter client (TweetDeck) reported that (in making an Android app) they had to contend with more than 100 different versions of Android software on 244 different handsets. The multiple hardware and software iterations presents developers with a daunting challenge."
He also mentioned Verizon's and Vodaphone's plans to create their own app stores.
"This is going to be a mess for both users and developers."
He then took on the open versus closed issue.
"Even if Google were right and the issue is 'closed' versus 'open,' open doesn't always win," Jobs said, citing Microsoft's PlaysForSure DRM technology, which it eventually abandoned.
"We think the 'open' versus 'closed' argument is a smokescreen for what's really best for the customers," said Jobs. "We think Android is very, very fragmented and becomes more so every day. We think this is a huge strength of our approach when compared to Google's. We think integrated will trump fragmented every time."
On the growing tablet landscape:
"I'd like to comment on the avalanche of tablets poised to enter the market in the coming months. First it appears to be just a handful of credible entrants."
Of those, many are planned to be 7 inches. "One naturally thinks that a 7-inch screen would offer 70 percent of the benefits of a 10-inch screen. This is far from the truth: 7-inch screens are 45 percent as large as an iPad...this size isn't sufficient for making great tablet apps."
"Apple has done extensive user testing and we really understand this stuff: there are clear limits on how close you can place things on a touch screen, which is why we think 10 inches is the minimum screen size to create great tablet apps."
He also took on the feasibility of making a tablet closer in size to a smartphone.
"No tablet can compete with a smartphone. Given that all tablet users will already have a smartphone in their pocket, giving up screen area (so it can) fit in a pocket is a bad trade-off."
Regarding Android on tablets:
"All these new tablets use Android software, but even Google is telling them not to use the current release, FroYo, for tablets and to wait until next year...What does it mean when you ignore them and use it anyway?"
"iPad has more than 35,000 apps on the App Store. This new crop of tablets will have near zero."
In summary, he said, "We think the current crop of tablets will be DOA--dead on arrival." They will be "too small" at 7 inches, and they will go to a higher screen size next year, thus abandoning the developers who jumped in this year, he claimed.