Apple COO Tim Cook on Android, Components, and More

Macworld’s transcript of Tim Cook’s comments on the quarterly earnings analyst call earlier today. Things that stood out to me:

  • Demand for the iPhone 4 is still outstripping supply. They can’t make them fast enough, and haven’t even launched on Verizon yet.
  • For phones, he’s talking about the “handset market” in general, not just smartphones. Going forward, “smartphone” market share isn’t the number to look at. It’s handset market share, period. All phones will soon be smart phones. People with feature phones are future smartphone buyers.

Regarding components, Cook said this:

On the operational side of the house, as you probably remember, we’ve historically entered into certain agreements with different people to secure supply and other benefits. The largest one in the recent past has been, we signed a deal with several flash [memory] suppliers back in the end of 2005 that totaled over a billion dollars, because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for our company. We think that was an absolutely fantastic use of Apple’s cash, and we constantly look for more of these. And so in the past several quarters, we’ve identified another area and come to some recent agreements that Peter talked about in his opening comments. These payments consist of both pre-payments and capital for process equipment and tooling. And similar to the flash agreement, they’re focused in an area that we feel is very strategic. And so I’d prefer not to go into more detail about what specific area it’s in, but it’s the same kind of thinking that led us to those deals.

My guess is that this is about touchscreen display technology. Apple is ahead of the entire industry here — no competing device has a display as nice as the iPhone 4. I think they want to push ahead technology-wise, and are paying up front so they can meet demand.

Regarding iPad competitors:

Then you have the Android tablets, and the variety that are out shipping today, the operating system wasn’t really designed for a tablet, and Google has said this. This is not just an Apple view by any means. And so you wind up having a size of tablet that is less than what we believe is reasonable or even one that would provide what we feel is a “real tablet experience.” So basically you wind up with a scaled-up smartphone, which is a bizarre product, in our view.

So those are the two that are shipping today, and frankly speaking, it’s hard for me to understand, if somebody does a side-by-side with an iPad, I think some enormous percentage of people are going to select an iPad there. Those are not tablets that we have any concern on.

Translation: “We still don’t have any competition.”

Tuesday, 18 January 2011

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