The September Quarter Outcome: Apple Prepares For Battle

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    Posted: 19 October 2010 09:44 PM #31

    Well, he also said music subscription services wouldn’t really get anywhere.  He was right on that too.

    SJ’s advice is also a challenge.  Most competitors ignore or go up against Apple at their own peril.  And if the tablet makers listen to Steve now, their 7” tablet plans are blown up!  Competitors will make 7” tablets no matter what SJ says, and if they fail, it’s quite obvious where the next wave of tablets, if any, will go from there - right up to ripping off Apple again.

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  • Posted: 19 October 2010 10:47 PM #32

    Mav - 20 October 2010 12:44 AM

    Well, he also said music subscription services wouldn’t really get anywhere.  He was right on that too.

    SJ’s advice is also a challenge.  Most competitors ignore or go up against Apple at their own peril.  And if the tablet makers listen to Steve now, their 7” tablet plans are blown up!  Competitors will make 7” tablets no matter what SJ says, and if they fail, it’s quite obvious where the next wave of tablets, if any, will go from there - right up to ripping off Apple again.

    The challenge for competitors is price point. There’s no participation in after-purchase revenue and they have to come well under Apple on price. Apple has grabbed all of the holiday quarter distribution that’s possible leaving crumbs on the floor for anyone entering the market now. What’s to differentiate a competitor’s product from the iPad except price and size?

    A 7” tablet is not how Apple envisions a tablet product. The Android folks will be tripping over each other to find a tablet market segment that works.

         
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    Posted: 20 October 2010 12:29 AM #33

    DawnTreader - 20 October 2010 01:47 AM
    Mav - 20 October 2010 12:44 AM

    Well, he also said music subscription services wouldn’t really get anywhere.  He was right on that too.

    SJ’s advice is also a challenge.  Most competitors ignore or go up against Apple at their own peril.  And if the tablet makers listen to Steve now, their 7” tablet plans are blown up!  Competitors will make 7” tablets no matter what SJ says, and if they fail, it’s quite obvious where the next wave of tablets, if any, will go from there - right up to ripping off Apple again.

    The challenge for competitors is price point. There’s no participation in after-purchase revenue and they have to come well under Apple on price. Apple has grabbed all of the holiday quarter distribution that’s possible leaving crumbs on the floor for anyone entering the market now. What’s to differentiate a competitor’s product from the iPad except price and size?

    A 7” tablet is not how Apple envisions a tablet product. The Android folks will be tripping over each other to find a tablet market segment that works.

    They gave Apple way to much time to set the stage.  Samsung has a product because they are in bed with Apple, but they are not stupid, their best component customer is Apple so if they compete too hard the business will move elsewhere.  Apple provides quantity for your fab so if Samsung hopes to compete against Intel in the Fab business, they need Apple, it’s a tight balance, compete at the margins and not the core.  If Samsung hopes to make OLED the next generation display, they need Apple and if they want to sell higher density NAND they need Apple, so as much as I think they would like to rule the smartphone business their other businesses require they play nice which means they won’t go after cutthroat pricing to gain market share against Apple.

         
  • Posted: 20 October 2010 12:32 AM #34

    pats - 20 October 2010 03:29 AM
    DawnTreader - 20 October 2010 01:47 AM
    Mav - 20 October 2010 12:44 AM

    Well, he also said music subscription services wouldn’t really get anywhere.  He was right on that too.

    SJ’s advice is also a challenge.  Most competitors ignore or go up against Apple at their own peril.  And if the tablet makers listen to Steve now, their 7” tablet plans are blown up!  Competitors will make 7” tablets no matter what SJ says, and if they fail, it’s quite obvious where the next wave of tablets, if any, will go from there - right up to ripping off Apple again.

    The challenge for competitors is price point. There’s no participation in after-purchase revenue and they have to come well under Apple on price. Apple has grabbed all of the holiday quarter distribution that’s possible leaving crumbs on the floor for anyone entering the market now. What’s to differentiate a competitor’s product from the iPad except price and size?

    A 7” tablet is not how Apple envisions a tablet product. The Android folks will be tripping over each other to find a tablet market segment that works.

    They gave Apple way to much time to set the stage.  Samsung has a product because they are in bed with Apple, but they are not stupid, their best component customer is Apple so if they compete too hard the business will move elsewhere.  Apple provides quantity for your fab so if Samsung hopes to compete against Intel in the Fab business, they need Apple, it’s a tight balance, compete at the margins and not the core.  If Samsung hopes to make OLED the next generation display, they need Apple and if they want to sell higher density NAND they need Apple, so as much as I think they would like to rule the smartphone business their other businesses require they play nice which means they won’t go after cutthroat pricing to gain market share against Apple.

    This seems logical and well thought out. On the other hand, Samsung probably does not have a product that can compete on a level that could matter.

    [ Edited: 20 October 2010 12:50 AM by jeffi ]

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    Posted: 20 October 2010 12:35 AM #35

    Falkirk, since you and I have been on record way back as saying that there is no place on Apple’s shelf for a 7” tablet, this kind of ends that discussion.

    I think it will come as no surprise that I am very happy SJ finally came out and took the gloves off. Apple this past year (and longer) has taken a lot of flack from the competition. I like the aggressive stance, let your opposition know that you are in it to win it.

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    Posted: 20 October 2010 12:39 AM #36

    We have an old adage in the military.  Never under estimate your enemy.  Samsung IMO has been along for both the iPod, iPhone and now the iPad, they learn as they go, so they may not have the brand or the software, but they could definitely get close on the hardware.

         
  • Posted: 20 October 2010 12:55 AM #37

    pats - 20 October 2010 03:39 AM

    We have an old adage in the military.  Never under estimate your enemy.  Samsung IMO has been along for both the iPod, iPhone and now the iPad, they learn as they go, so they may not have the brand or the software, but they could definitely get close on the hardware.

    Apple’s strength is the integration of software and hardware. They have no peer. Therefore, for the time being they really have no competition.

    Apple is the only company offering the same integrated solution across multiple iOS products. This combination does not yet exist anywhere else. It is almost unbeatable.

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    Posted: 20 October 2010 12:57 AM #38

    They don’t have the software. 

    Even if they had the software, it wouldn’t be in-house (Android, see Galaxy S phones).

    Even if it was in-house (Bada), they don’t have the culture or “whole widget” expertise that Apple has.  Really, only Apple has stuck to the vertically integrated approach (with varying degrees of success, but with great dedication since Apple 2.0 in 1997).  Hardware and software are always meant to go together at Apple.  Every single detail is integrated.  Yes, Apple doesn’t make RAM or the support chips, but just look at the motherboards in the teardowns.  This is what will keep Apple ahead of everyone for the foreseeable future.  And as for keeping one’s head on a swivel, Apple is more attentive than many people might think.  Those who misunderstand equate Apple’s focus with tunnel vision.

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    Posted: 20 October 2010 01:12 AM #39

    FalKirk - 20 October 2010 12:19 AM
    FalKirk - 19 October 2010 11:23 PM

    2) 7” tablets are going to be big

    I hadn’t really thought about this, but Steve really put his neck on the line yesterday. He flat out said that 7” tablets were no good. Naturally, RIM, Android and a bunch of pundits have called him on this. If 7” tablets prove to be a big success, then Jobs will look pretty foolish and lose considerable credibility.

    I’m guessing Jobs wouldn’t have made such a bold public predication if Apple hadn’t thoroughly explored the 7” tablet and decided that it had few redeeming features. He must feel very, very certain that 7” tablets are a disaster waiting to happen if he called them “Dead On Arrival”. If you have faith in Jobs - and he’s been right a lot more than he’s been wrong - then the competition might be walking into a buzz saw.

    Two quick points:
    1) Yes, they thought it out. They’ve been thinking about the tablet space for years before releasing the iPad.
    2) Even if it’s the wrong call (which I doubt), Steve can always change his tune later and just call the 7” device something else, maybe twiddle with the form factor. For example, remember how in 2008-2009 Apple was pressed by pundits about netbooks, and Steve (and others) kept saying “we don’t ship junk”, “we just don’t think there’s anything viable at a $500 price point”. The boom, they essentially release a $500 computer, change the form factor, open up the tablet category—and who today would be dumb to say “oh, but you told us you will never release a netbook”.

         
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    Posted: 20 October 2010 01:19 AM #40

    adamthompson3232 - 20 October 2010 04:15 AM

    SJ said on the call they’ve been studying tablets for ten years. Rest assured they have prototypes of all shapes and sizes that have been tested internally extensively for many years. I trust SJ knows what he is talking about when it comes to tablets more than any other person on Earth.

    I forget where I read this, so don’t quote me on this, but Apple first considered the tablet before the iPhone, and may have made some prototypes that SJ rejected. They then switched focus to the iPhone and brought back iPad development to the forefront with lessons learned from iPhone. By then they also had iOS in a fairly mature state, and the App store ecosystem.

    Pure genius.

    I only wonder what’s next. (Maybe we’ll get a peek tomorrow)

         
  • Posted: 20 October 2010 01:42 AM #41

    mbeauch - 20 October 2010 03:35 AM

    Falkirk, since you and I have been on record way back as saying that there is no place on Apple’s shelf for a 7” tablet, this kind of ends that discussion.

    Well, to be honest, if Steve had announced a 7” tablet yesterday, I was going to rush back here and edit out all my tablet comments. So I’ll let you take the credit for being so prescient.

         
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    Posted: 20 October 2010 03:18 AM #42

    Apple could manage 90-100% or more YOY iPhone growth in fiscal Q1 pretty easily just as long as they can keep iPhone 4 production up.  That’ll lead us to a 16-17 million iPhone quarter as a starting, ballpark estimate - impressive by any measure.

    iPad is great, but iPhone is causing panic and mayhem in the streets of its competitors.  It’s the undisputed disruptive wrecking ball in Apple’s lineup, and deservedly so.  It’s an amazing product.

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    Posted: 20 October 2010 08:25 AM #43

    FalKirk - 20 October 2010 04:42 AM
    mbeauch - 20 October 2010 03:35 AM

    Falkirk, since you and I have been on record way back as saying that there is no place on Apple’s shelf for a 7” tablet, this kind of ends that discussion.

    Well, to be honest, if Steve had announced a 7” tablet yesterday, I was going to rush back here and edit out all my tablet comments. So I’ll let you take the credit for being so prescient.

    The whole thing reminded me of the iphone Nano. There are so many rumors about Apple products that I am glad SJ put this one to bed early.

    That was funny BTW, me, I would have just said I was wrong. I am not the type who believes in flooding the market with a bunch of products and hope some of them stick. I like Apple’s mentality of producing products that make sense and deliver the UI that is expected. Case in point, Android.

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  • Posted: 20 October 2010 11:23 AM #44

    DawnTreader - 19 October 2010 04:01 AM

    My latest missive at Eventide.

    Snippet: It’s clear from his comments Mr. Jobs and Apple are bracing for battle with Google for supremacy in the smartphone market and the emerging market for tablet devices.

    I enjoyed listening to and documenting the litany of quarterly numbers put forward by members of Apple’s executive team. But it was the remarks by Mr. Jobs that put Apple’s FY 2011 mission and goals on the table for the world to see and hear.

    This is a battle and I expect Apple to remain focused on market share and continued integration of the platform. When focused, there’s no enterprise that’s more successful than Apple. The company will not lose this battle and will not take its focus from winning this game.

         
  • Posted: 20 October 2010 11:51 AM #45

    mbeauch - 20 October 2010 11:25 AM

    I am not the type who believes in flooding the market with a bunch of products and hope some of them stick. I like Apple’s mentality of producing products that make sense and deliver the UI that is expected. Case in point, Android.

    This is probably the wrong thread for this discussion, but I truly wonder how Apple continues to create hit after hit. It’s well known that they eschew the opinions of their customers. They rightly know that their customers cannot know the unknowable. Or to paraphrase Henry Ford, that people want a faster horse, not a car.

    But how do they continually “get it right”? When they created the iPhone, there was nothing like it. When they created the iPad, there was nothing like it. They had to make literally hundreds upon hundreds of decisions and they had to get almost all of them right and somehow they do it time after time after time.

    Not that they don’t do incredible amounts of research. Take Jobs’ recent comments regarding the 7” tablet. My takeaway from that is that Jobs is positive that 7” tablets are a complete non-starter - that they carefully reviewed the possibilities of the 7” tablet and found them wanting. But still, that means they are relying solely on their own judgment. No consultations. No feedback. No one’s wisdom to rely upon but their own.

    The Android approach is so much easier. Try something and see if it works. The Apple approach is the equivalent of betting everything on a single roll of the die.

    [ Edited: 20 October 2010 12:12 PM by FalKirk ]