Apple [AAPL] stock seems to be climbing on news of a $9 billion quarter and a huge shareholder bung, though while there's disappointment on Tim Cook's hint that "exciting" new products won't debut until later this year, another big message was his critical view of Android devices -- though he was careful not to make a direct criticism.
When asked if Apple intends pumping out a few 5-inch iPhones, the Apple CEO had this to say:
"My view continues to be that iPhone 5 has the absolute best display in the industry. And we always strive to create the very best display for our customers. And some customers value large screen size, others value also other factors such as resolution, color quality, white balance, brightness, reflectivity, screen longevity, power consumption, portability, compatibility with apps and many things.
"Our competitors had made some significant trade-offs in many of these areas in order to ship a larger display, we would not ship a larger display iPhone while these trade-offs exist." (Source: Seeking Alpha).
While this suggests Apple won't ship a larger iPhone until it can ensure adequate battery life and a decent display within a device of that size, it also suggests something else -- that Apple believes its competitors have made compromises in product design.
Does this really matter when these competing devices now account for the majority of smartphone sales?
From a utilitarian point of view, probably not: After all, it's surely a good thing that consumers can access these sophisticated technologies in some device, even if it isn't an Apple device. The point being that access to the powerful potential of mobile technologies is now broadly available.
The presence of cheaper, though perhaps not as well-designed devices suggests mobile users should be accessing the Web, shopping and otherwise enjoying their experience.
Apple doesn't see this happening. The company chose to reel off numerous independent statistics to show that the iPhone/iPad remain the devices people most love and most use -- despite the confusing market share numbers, citing: "The highest loyalty and customer satisfaction rates in the businesss."
What data did the company point us to?
- ComScore recently claimed iPhones lead the US market with 39% share, up from 35%.
- IDC Japan claims the iPhone to be the leading smartphone brand in Japan.
- IDC ranks iPhone number one or two in smartphone sales in "over half" the countries it tracks.
- Kantar measured 95% loyalty among iPhone users.
- For the ninth time JD Power has ranked iPhone the number one smartphone in customer satisfaction.
- Nearly 30,000 firms are developing internal apps for iPhone
- Cisco's BYOD scheme across 80 countries generated a 50% increase in the number of iPhones connecting to its corporate network.
- ChangeWave cites a 96% satisfaction rate among iPad customers.
- iOS developers earned $4.5 billion in the most recent four quarters.
- Canalys estimates App Store sales accounted for 74% of all app sales on all platforms worldwide in the March quarter.
- McAffee Labs believes 97% of identified mobile malware is on Android.
- Chitika found that iPad accounted for 82% of all North American Tablet Web Traffic in March.
- iPad is now in use across 95% of the Fortune 500.
- iPad is now in use across 89% of the Global 500.
That's a ton of data. It represents that Apple's iOS devices maintain their reputation as being the best devices to actually use, and suggests many consumers opting for Android do so because they want an iPhone, but can't afford one -- despite continued availability of the relatively cheap iPhone 4.
It's all about customer experience.
Take system software upgrades. As Cook explained during questions:
"Because we are not fragmented like our competition, we can update an iOS with a major release and a substantial percentage of our customers will update to the -- to our latest offer."
The sheer quantity of data regarding the company's continued place in the enterprise is a huge opportunity for developers: I'm seeing a huge array of enterprise-focused iOS apps appearing in recent months. It means Apple's developers now -- for the first time -- enjoy huge opportunities in the BYOD-centric enterprise markets.
To be fair, you have to expect some spin from Apple as it reveals its results. After all, while the smartphone industry grew around 30%, Apple's share didn't keep pace, Cook admitted.
This means the company is pointing to these metrics in order to make its case that, despite not leading the pack, it continues to offer the best smartphone platform.
Tim Cook: "However, I take your point if the market did grow by 30%…we grew less than that…this point is not lost and we do want to grow faster."
Don't expect any immediate product introductions as Apple attempts to stimulate that growth -- not least because Apple's June quarter guidance targets revenue between $33.5 billion to $35.5 billion, in contrast to $35 billion in the year ago quarter, which suggests the company isn't planning a big product intro, despite previous rumors.
This will change, the company hopes:
"Our teams are hard at work on some amazing new hardware, software, and services that we can’t wait to introduce this fall and throughout 2014. We continue to be very confident in our future product plans," said Cook.
Cook also alluded to "new product categories," admitting the company to be "excited" about these new attempts.
For the present, Apple's message seems to be: "We're not shipping until we're ready, our platform leads the pack, and Android devices are (to an extent) compromised by design trade-offs, system fragmentation, poor user experiences and low loyalty."
Despite this I sense the lowered guidance and warnings not to expect new products yet could translate into another period in which the company's reputation gets attacked, driving down interest in whatever new products it does introduce.
Dancing to a different drum, analysts seemed broadly positive in their response to Apple's news. I quite like Gene Munster's observation that:
"We do not believe Apple has hinted to new product services and categories in the past, making Cook's comments tangible evidence innovation is alive at Apple."
"We believe the new product categories will include both a television to be announced at the end of 2013 and a smartwatch in 2014. We also expect a digital wallet offering in iOS7 or iOS8 (2013 or 2014).
"We continue to expect a larger screen iPhone in March 2014. Cook’s comments all but eliminate a larger screen iPhone in the near term suggesting Apple would not trade a larger display at the expense of battery life and quality of display.”
At this stage Apple's defenses appear slightly slim -- though experienced company watchers will recognize that the firm has always been prepared to wait until it can execute well. It won’t ship products until they are ready, and following the fracas of Maps, now seems unlikely to introduce new software until this is ready too.
For competitors, Apple's underlying message is a little starker. Apple is studying the market, and seeks to field solutions designed to take advantage of its industry leading customer satisfaction and loyalty levels within devices that contain little or no design compromise -- display and battery life being key to its plan.
Things will become more interesting in this space soon enough as Apple seeks to introduce sophisticated solutions that by their very existence reinforce its message that competing devices are, at least in a sense, compromised.
That's an opportunity for Android device makers to introduce better devices, of course -- assuming they can forge a sustainable market share in the face of fierce competition. Android fans meanwhile will decide if Apple's inherent argument is strong enough.
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