On the eve of the release of the new iPhone 5s and 5c, Apple CEO Tim Cook granted a rare interview with Bloomberg Businessweek on the state of the mobile market. Here are some of the highlighted lessons form the conversation:
The iPhone 5c is not junk
While many feared that the introduction of the low-cost version of the iPhone might signal Apple’s newfound embrace of mediocrity, Cook waved off these concerns by saying, “There’s always a large junk part of the market, we’re not in the junk business.”
The ‘c’ in iPhone 5c could be said to stand for ‘colour’, but it could as easily stand for ‘China’ – as in the country’s exploding smartphone market. At only A$130 cheaper than its top-shelf counterpart, the 5c is still more expensive than the average smartphone, but hardly represents a race to the bottom.
While the lower cost may help the iPhone secure a larger share in developing markets (as well as domestically), Cook says that the company “never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost”.
While that might be interpreted as generic CEO-speak, the initial reviews of the iPhone 5c appear to agree with Cook’s sentiment. Most reviewers described the phone as a revamped version of last-year’s well-received iPhone 5, but with a fashionable new exterior.
It’s easy to view today’s mobile marketplace as an analogy to the desktop wars of the 1990s, with the part of Windows being played by Android while Apple remains the smaller premium player. Despite its growing dominance in the marketplace, Cook views Android’s chaotic fragmentation as a weakness that even Windows never faced.
“I don’t think of Android as one thing,” Cook commented. The current state of the market bears that out: less than half of Android users are using the latest version, Jelly Bean, while a full third of Android users are still using Gingerbread, which came out in 2010. And that’s not to mention that each manufacturer of Android devices is free to cultivate their own forked version of the OS. This is certainly not the ideal system for developers of third-party apps, who have to deal with all these various flavours. And it’s an issue that will only be exacerbated with the introduction of Android Kit Kat.
According to Cook, this fragmentation breaks down the Windows/Android metaphor. Microsoft was a far more homogenous competitor accross manufacturers, while the Android experience is all over the map. “Microsoft kept things the same, and the level of fragmentation wasn’t as much,” says Cook. Of course, Windows fragmentation was an issue back in the 90s and is still an issue for PC users today – particularly on the security front. However, Cook says the problem still doesn’t compare to Android because “there weren’t so many derivative works out there with Windows”.
Everyone wants to be Apple
In one way or another, nearly all the major mobile manufacturers are taking their cues from Apple and wanting to take control of everything from software to retail.
“Everybody is attempting to adopt Apple’s strategy,” said Cook. And that bit of boasting is largely backed up by the business moves of the past year.
Even as Microsoft still attempts to push its Windows Phone operating system, the company has doubled down on hardware with its recent multibillion-dollar purchase of Nokia. Similarly, Google has continued its move away from its software roots with its purchase of Motorola Mobility. Conversely, Samsung appears to be interested in cultivating its own software ecosystem, holding its own developers conference for the first time. Let’s not even mention everyone trying their hand at dedicated retail shops.
“We’re not looking for external validation of our strategy, but I think it does suggest that there’s a lot of copying, kind of, on the strategy and that people have recognised that importance.”
Apple will innovate its way to survival
The peanut gallery has been sounding off on Apple’s innovation problem since the late Steve Jobs stepped down from his leadership role. Whether the supposed innovation problem is actually a source of legitimate concern remains debateable, but it’s at least something Cook is aware of.
Specifically, Cook points to the lesson of the once-dominant Nokia, which has been subsumed by Microsoft: “I think [Nokia] is a reminder to everyone in business that you have to keep innovating and that to not innovate is to die.”
by Evan Dashevsky, TechHive