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My questions for Tim Cook

Next week at AllThingsD’s D11 conference in LA, Apple CEO Tim Cook will be interviewed by Kara Swisher and Walt Mossberg.

Here are some questions I’m hoping they will ask:

  1. Why is the iPhone not sold as a portfolio product? Meaning, why, after six years, is there no iPhone product range being updated on a regular basis. Having a portfolio strategy is not only followed by every phone vendor but also by Apple for all its other product lines, including the iPad, which came after the iPhone. In other words, please explain why the iPhone is anomalous from a product portfolio point of view.
  2. There are more than 800 operators world-wide so why are there only about 250 of them carrying your phone? Competitors large and small (from BlackBerry to Nokia to Samsung) have cited relationships with more than 500 operators so Apple is being uniquely selective. My question does not stem from a lack of patience: this total number of iPhone distributors has not increased markedly for over a year. Are you limiting distribution through conditions placed on operators (like the availability of sufficient quality data services) or are operators finding the distribution agreement too onerous (e.g. too high a minimum order quota)?
  3. In 2012 Apple’s capital spending has reached the extraordinary level of $10 billion/yr, higher than all but the most capital-intensive semiconductor manufacturers. This is unusual for Apple as it was less than $1 billion in the year before the iPhone launched. It’s also unusual for Apple’s competitors in phones, PCs or tablets. It’s on a level matched only by semiconductor heavyweights. What is the purpose of this spending and what should we read into it leveling off at $10 billion for 2013?
  4. Depending on one supplier is an operational faux pas, and yet Apple has found itself in that situation with Samsung for mobile microprocessors. It may be excusable in PCs with Intel having an architectural monopoly but it’s not excusable for a chip that you designed yourself and purchase in massive quantities. Why did you give Samsung such a concession, especially knowing their potential as a competitor vis-à-vis alternative suppliers who had no such potential? Does the answer have something to do with the previous question?
  • http://www.facebook.com/HirschensHarry Harry Hirsch

    As interesting as unlikely to be answered.

  • Rahul

    I bet the first few questions will be on how Apple pays its tax. :)

    • http://twitter.com/asymco Horace Dediu

      There are no answers Cook could give to this question that an average corporate tax accountant could not answer better.

      • Gonji

        Still won’t stop them from wasting valuable time asking about it; hoping for some gem that they can run with for the next week.

  • http://sharonsharalike.com/ Sharon Sharalike

    Great questions every one. I hope the focus is on that, and not the tax issue. Tax questions will not yield any new information. These will, even if the answers are somewhat evasive.

  • ralphel

    All good questions — to which I would add:

    * How and when is Apple going to fix the iCloud APIs and implementation? How concerned are you that many of the most prominent iOS and Mac developers and commentators are now openly criticising iCloud and endorsing and/or taking sponsorship from Windows Azure Mobile Services?

    * How and when is Apple going to fix the app discovery problem?

  • sizuco

    Excellent questions, especially 3 and 4. #3. Do we have numbers/insight on what their capital spending is? Given Apple’s supply chain prowess, I can’t help but feel that #4 was because there was no other option.

  • Pingback: Four questions for Tim Cook by Asymco()

  • actualbanker

    Maye one of the “analysts” will have the sense to ask these on an earnings call. Don’t hold your breath though.

  • Jürgen Pöschel

    You should have bought that coffee brake meeting …

  • David Stevenson

    I am not going to try to put words into Cook’s mouth, but I do have some ideas as to what some of the contributing factors were that may answer your questions.

    1. I think that a portfolio was always in the roadmap, but it just kept getting pushed out farther and farther into the future than they had initially thought. Some things that may have caused the deferral of that part of the strategy:
    a. getting pushed into accepting a subsidized model (which was not how the iPhone launched), although this is probably minor, still it occupied management in replanning the strategy.
    b. the app store took off much faster than planned, and they thought it more important not to fragment the platform in order to feed that growth.
    c. they moved up the launch of the iPad by two, maybe three years, and this was yet another big fragmentation of iOS (on top of retina!), and this pushed out the portfolio option (frankly, I think Steve Job’s health played heavily into moving up the launch).
    d. up until this year, the iPhone was growing faster than Apple could support it (straining their supply chain), and launching the portfolio was beyond their capacity (both management and supply-chain relationships, on top of switching out Samsung as a supplier, and the portfolio kept getting pushed down on the to-do list by other, more important issues).
    e. last, and probably not least, some key technology wasn’t ready yet, and when the portfolio does launch it will be obvious by how they differentiate the portfolio why it didn’t launch sooner.

    2. I think that the fact that the app store is available in more countries than the iTunes media store is the key here: they can’t build out the ecosystem fast enough in the markets they already in, and they decided to expend their resources in this area more than adding more carriers (and wait until the infrastructure in new countries, in new carriers, can be built up to support an Apple-quality iPhone experience).

    3. I expect that the shift away from Samsung (thus building up new suppliers), coupled with the delay in launching IGZO technology, meant that Apple couldn’t push more money into CapEx even if they wanted to (which I think they probably did).

    4. They could have used AMD as another source for x86 chips, but I think the benefits they got by keeping Intel as a sole source so far outweighed anything AMD could have offered that it was a no-brainer. And I think that goes for why Samsung instead of multiple foundries, until Samsung literally gave them no choice (ref. Apple offering to license some but not all of its intellectual property to Samsung and receiving a no-thanks).

    • Tofdriver

      I think e) is true on two components: screen and CPU.
      The in-cell screen is a very capital intensive display, but should be cheap on a variable cost basis with big volume and better yield
      ( source: http://fr.scribd.com/doc/106589022/In-Cell-Touch-Technology)
      In house CPU is a multi year and half a billion R&D project. Again, huge fixed cost, low unit cost after that ( you pay less to ARM for every chip, less to the foundry…)
      Of course these two are also related to questions 3&4 of Horace

    • Walt French

      “…delay in launching IGZO technology…”

      An important point. Screens may be as much a competitive issue — and critical bottleneck — as CPUs.

    • tmay

      Apple has mostly dodged screen resolution fragmentation that would be a
      major pain to developers, but I can’t see them throwing another round of
      bitmapped UI update requirements out. I see resolution independence as key to a wider product portfolio as it was in Aqua/Quartz introduced in OSX 10.0.

      I speculate that Apple will transition to a resoution independent/vector graphics model in iOS before we see another round of screen resolutions or sizes. Resolution independence will be a performance hit that might be best offset by another round of die shrink and a generation forward in the GPU.

      I look for this in iOS 8, after the “flat” UI in iOS 7 is digested by developers. Tlhis would also give time for IGZO screen production to ramp, if in fact this is Apple’s near term screen strategy.

  • def4

    1. If you look closely at the differences between the product lines you mentioned and iPhone the answers would be pretty obvious.

    An iPhone nano with a 1.5″ – 2.5″ screen and measly computing power would suck (anything better would be a market segmentation faux pas).
    It would suck for Apple because it would either confuse things by having another mobile platform or hobble the development of iOS; and it would suck for consumers because it would be a bad product.
    The same would doubly apply for an iPhone shuffle. That would be a totally disastrous dumb phone product.

    The big hint of what’s to come is the iPad comparison. Had you been paying close attention you would have noticed three clear signals last autumn: the A4 powered first generation iPad did not get iOS 6, while at the same time we not only kept selling the A5 powered iPad 2 but also released the completely new and portfolio expanding iPad mini built around the same A5.
    That’s the line in the sand. There was no portfolio strategy before we could move downmarket with a product that has enough processing power to not impede the evolution of the software platform.

    The portfolio strategy plan for iPhone should be clear now.

    2. Both. Our partners must be committed.

    4. Chip design and fabrication is so closely tied that it’s just too expensive to have more than one supplier and changing them is difficult, expensive and time consuming.

    3. Yes.

    • JohnDoey

      I don’t think an iPhone nano (iPod nano with cell connection) would suck. Lots of phone users only use voice calls and SMS on their phones and complain that their phones are much too complicated. I think many users would find an iPhone nano to be more functional and usable and they would not only do voice and SMS, they would do music and video and a couple of apps like Nike+ and some basic games like a special Angry Birds nano that Apple could commission and include. The lack of compute power is mitigated by only including highly optimized bespoke apps, not having a wide open App Store.

      When iPod nano came out, many people said it sucked because it had so much less storage than a full-size iPod (it started in 2005 with 1/4 the storage of the original 2001 iPod) but it turned out that for most people iPod nano was even better than original iPod. And many full-size iPod users bought iPod nano as a second iPod for the gym.

      A higher priority is to turn iPod touch into a phone by adding 3G, making it essentially an “iPhone 5 3G.” But I think iPhone nano would also have a place with maybe a billion or 2 phone users.

      • handleym

        Apple’s role is not to make cheap phones for the world’s poor and tech-illiterate; that’s Nokia’s role.

        If Apple makes the type of phone you suggest, then what?

        (a) Carriers will attempt to use it to force concessions from Apple. No-one is going to switch carriers to get an iPhone nano like you describe, so carriers have the power in that negotiation.

        (b) Apple can’t sell it for very much because Apple is selling UI and, by definition, the phone has very little UI.

        (c) The phone can be copied trivially. Even assuming Apple does an awesome job of making it simple, again by definition that very simplicity (and the fact that the whole point is no apps, no bells and whistles) means that anyone else can copy the “essence” of what makes it simple. And if they’re smart enough to copy the ESSENCE, not the specific visual design elements, they’re probably legally untouchable.

        An iPod Touch with cell data is a more interesting concept, but I don’t know that the market for that is substantially different from the market for an iPad mini with cell data. The kind of people who can only afford one device tend to go for a larger device, even though it’s less convenient as a phone — that’s the point of “phablets” and the reason they sell so much better outside the US than inside it.

        I’d see the issues differently.

        (a) With China, the problem is political not technical. Get China Mobile onboard — or ignore them if the conditions are unacceptable and wait to see if we get a migration from them to smaller carriers which do have Apple deals.

        (b) With India (and maybe Indonesia) the problem appears to be a lack of deep infrastructure, so maybe a big local partner is needed, and maybe a different financing model (a T-mobile style pay over 24 months for the phone)? As for tech, an iPhone with a different SW base is not helpful in anyway. I’d say the solution is either stick with the 4 if that can be made cheap enough, or create a 4i (international) which saves money where it can — plastic shell, cheaper camera, maybe 80% slower CPU — basically good enough to meet needs and be competitive with the low-end competition, but not very desirable to even a US/EU/JP customer.

        (c) The real future, I think, is make more money out of the rich customers who already have iPhones and iPods. Which means good accessories. Which means, among other things, the long awaited iWatch and what I have called smart styluses. Maybe also a BT headset that, sure, costs $150 but also WORKS vastly better than what’s available today. At least have a Glass-like project in house, so that when the current whining and complaining about Glass stops and people see the potential, Apple can release their equivalent right away.

        Personally I think Apple has not pushed good iPhone accessories nearly hard enough. Not just generic crap like docks and cables, but accessories that are their own miniature computers, and that work as much better than their predecessors than iPhone did compared to its predecessors.

      • Gopiballava

        @JohnDoey:
        “Lots of phone users only use voice calls and SMS on their phones and complain that their phones are much too complicated”

        How many of these users are using iPhones? Most smart phones pre-iPhone were very poor phones with complicated and obtuse user interfaces. The iPhone and eventually its competition seems to have made this problem much less of an issue.

    • DesDizzy

      Second sourcing is a common and logical risk strategy and applies currently to many iPhone/iPad components. I presume, however, that at the time of the long term Samsung supply deal Apple was not in as strong a negotiating position as it is now (with hindsight).

  • Mark Jones

    Great questions. Maybe they’ll be a Q&A after the WWDC keynote and you can get one of these questions asked (if you’re attending).

    On 1, I’m sure Apple was exploring an iPhone “featurephone”, during that period when they were consistently saying that they’d have such a product if they could bring useful differentiated capability that people wanted to featurephones. But by 2011, when it became clear that just about everyone was eventually going to get a smartphone, I think there became no point in that, and the focus went back to a lower-cost smartphone. (I do think a lower-cost iPhone is coming to replace the iPhone 4/4S later this year.)

    Another question: When Cook says that iCloud is the strategy for the next 10 years, what does he mean? If Apple is moving beyond just selling devices, and if iCloud is intended to provide identity for a host of other monetized high-margin services, can iCloud services become good enough given that it will be limited to Apple devices only and thus, not have the scale (and network effects) of Google’s, (and in the future, Facebook’s and Amazon’s) services? Or is iCloud a defensive strategy in case iOS devices, for some unforeseen reason, get locked out of the other cloud services platforms?

    • JohnDoey

      iCloud is a consumer hub, and it essentially replaces the iTunes Mac/PC app, which was the previous 10 year strategy.

      • http://twitter.com/leicaman leicaman

        That’s like saying Dropbox replaces Pandora. Just because it can store music files doesn’t mean it can replace an application people use to listen to music.

  • http://sumocat.blogspot.com Sumocat

    #2 highlights what I keep saying about the “Android is winning” silliness. Android, through a variety of vendors, reached every carrier very quickly. Apple, on the other hand, is expanding on a far more deliberate pace, due I’m sure to more reasons than you describe. Android’s success has come largely in the absence of the iPhone (absent from nearly 70% of carriers), not in direct competition against it. The sooner Apple can close that gap, the sooner we can see the true competition commence.

    • obarthelemy

      How is adding 0 carriers in a year and seeing marketshare erode quickly a “deliberate pace”, except a downwards one ?

      • anonymous_coward12

        a lot of these carriers are prepaid carriers that piggyback on someone’s network. the customers there are very price sensitive and not iphone customers.

      • JohnDoey

        The deliberate pace likely includes a new phone model optimized for the needs of the missing carriers. For example, an iPod touch with a 3G chip at the same $299 price point would be marquee prepay phone in the same way that iPhone 5 is the marquee post pay phone.

        People complained from the 1998 cancelation of the Newton through December 2006 that Apple didn’t have a PDA and then they did iPhone. People complained for about 25 years that Apple didn’t have a low-end PC and then they did iPad. They don’t have to rush in, they just have to take their time and design the right product for each user and market.

      • http://sumocat.blogspot.com Sumocat

        “not increased markedly for over a year” is not the same as “adding 0 carriers in a year”. In the US alone, the iPhone expanded to Sprint, T-Mobile, and several regional carriers in the past couple of years. It’s slow, not stalled.

        Further, iPhone marketshare relative to the handset total has been steadily increasing since its introduction, not eroding. Thanks to Android, many handset vendors have been able to quickly transition from feature phones to smartphones, but they are close to hitting the ceiling on that as well. Of course, Apple’s iPhone growth likewise relies on transition of iPods to iPhones, but not to the same extent.

      • obarthelemy

        The US are not the world, heh .?

      • http://sumocat.blogspot.com Sumocat

        Pretty sure carriers added in the US still means more than 0 carriers were added, regardless of your worldview.

      • http://twitter.com/leicaman leicaman

        When your numbers are increasing in real numbers, and you own 75 percent of the profit, you’d be right to not see that as downward.

  • stevesup

    Nice list.

  • Chaka10

    I view Apple as a computing platform company (based on OSX-iOS), with a broad portfolio of products and services offered off of that platform. As such, I would ask Tim what he sees as strengths, weaknesses, opportunities and threats to that platform — in particular the threats and opportunities. I suspect he may be reluctant to talk about opportunities, except in general terms, but I would very much want to ask him to talk in detail about threats. E.g.,

    Google continues to expand the quality, breadth and depth of its services. How much of a threat is that near, medium and long term. Can he see a day where Google might be in a position to force Apple’s customers to choose between Google svs and Apple?

    How does market share play into the above? Market share for market share sake is silly, but it does matter — what’s the right level where Apple cares?

    Who/where other potential threats? MSFT? Samsung?…

    • dreyfus2

      Not sure Cook would perform a public SWOT analysis for the benefit of the competition. The risks they want to acknowledge are listed in the 10-K (which can be found on Apple’s investor site).

      Not sure Google is really “expand[ing] the quality, breadth and depth of its services” in a way that should concern Apple. Google shuts many services down. Others (like Google Docs) have not seen significant upgrades for ages, featured get removed (like ActiveSync support in Google Mail), and pretty much all new functionality is somehow tied to being registered and “signed in”. Some people will ignore the attached privacy issues, others won’t. Quantifying that is tasseography.

      Apple has to do what they do best: follow their own path. You are only ahead if others follow (copy) you.

      • Chaka10

        Yeah, exercise in the theoretical. 10-K Risk Factors are kitchen sink in nature and not very helpful (that’s not specific to Apple).

        I think you underestimate Google, which is a big mistake (and perhaps is how they stole up on Apple, with Schmidt on its board for the time that he was). I would rhetorically ask, how prevalent is the use of gmail and other Google svs among the Apple faithful? How would Apple fare if google maps were pulled from iOS (not just today but sometime in the future?)?

      • dreyfus2

        Gmail works on iOS devices, because it is IMAP compatible. Killing IMAP compatibility, Google would lose much more than iOS users. Google Maps is an income source for Google, Android is not. It is in Google’s interest to bring their search and maps products to as many users as possible (that is the only reason they are offering them anyhow). Personally, I do not care. I do not use Gmail and I prefer Apple’s maps by far (and for real navigation in the car I use a Navigon app anyhow, as both Google and Apple maps are not reliable enough).

        Schmidt being on Apple’s board gave Google maybe a year head start. Palm, Blackberry and MS have developed new OSs in 1-2 years. It is not that hard (doing it at all, doing it well is a lot harder, but Google is still not there). Google saved more time by stealing code from Oracle and others, and by avoiding any patent and licensing issues and leaving the law suits to the ODMs, than by spying on Apple. This is not exactly an achievement.

      • Chaka10

        Good answers, and perhaps that’s what TC would say. Though I still wouldn’t so easily dismiss Google as a threat on the radar.

      • Walt French

        Pretty sure that Google’s tactics are very vanilla; welcome all users (for free!!!) to your services, and then start cutting interoperability when you think that users will prefer to stay with your service than with the one (e.g., Outlook) that you now interoperate with badly.

        So many users made Google their home page—typing their actual destination into the search box instead of using your browser’s memory or bookmarks—that Google has become a portal to the internet. Now THERE’s a model that’s well-understood.

        The most directly threatened are AOL, Yahoo! and others of that ilk. I don’t think they’ve gone fully head-to-head because the demographics work more in favor of gaining younger users, rather than dislodging older ones. But I’m pretty sure that Apple is still Microsoft’s biggest threat, and that Apple will still be going strong when AOL & Yahoo! have shrunk to nothingness.

  • Pat

    Great questions. However, I think we need to also look at the other side of the story: software. So my question for Tim Cook would be about their software service offering. Google is eating their lunch. I believe the device is become more commoditized and the big differentiator will be the software.

    • JohnDoey

      Google is not eating Apple’s lunch in software. There are entire categories of apps that are totally missing from Google’s platform, while iOS has every kind of app, even very sophisticated pro music tools (e.g. Apogee Duet and Quatro work with iOS devices) and video editors from the 2 leading brands: Apple and Avid. Google also has almost no tablet apps and no notebook apps. Android apps are baby Java phone apps, while iOS apps are native C/C++ PC apps. The vast majority of the world’s non-Web client apps are written in C and are easily ported to iOS. Android requires years-long total rewrites in Java that cannot be funded by most developers. And even if only looking at Web apps, Android’s HTML5 support is scandalously bad, just shocking, while iOS continues to be the marquee HTML5 platform. And at the OS level, Apple’s Software Update and lack of viruses make Android look like a child’s toy.

      Try and stay somewhere close to the facts.

      • http://twitter.com/mieswall pablo bañados

        Completely agree. There is a world of difference in apps written in objective-C, against Java toys.
        In fact, what makes the difference in Apple is precisely the software, brought to the company since the purchase of Next (until now, most classes are called NSxxx, from NextStep). The hardware is a physical complement (a beautiful one), but what really matters in Apple is the consistent, solid as a rock, extremely well thought programming environment, imho. Also the deep root of the development to come, also (iTV, i Watch, etc).
        On the other hand, Android fragmentation, viruses, non upgradable versions, are just a consequence of what seems to be a messy, patched as going, fundamentally flawed initiative, born as a copy of the look, but not of the soul of OSX/IOS. Very much like Windows.

      • Oluseyi

        I don’t usually bother to wade into these things, but Objective-C is a largely archaic, needlessly verbose language that Apple is trying to force into this century bit by bit. In the last iteration they made @synthesize optional and allowed class categories to have ivars; in the next iteration they might get type inferencing and an auto/var keyword. Who knows when we’ll get namespaces so we don’t have to prefix our classes with three-letter abbreviations to avoid collisions.

        Welcome to C# 2.0 (current version? 5.0).

        And then you heap praise on Cocoa (the NextStep derivative), which is only laudable if you’re comparing it to Carbon and Win32 (and then not necessarily, as ATL/WTL clean things up considerably). It doesn’t even have bindings! (Apparently, NSObjectController is deprecated, and was never available on iOS, so the one attempt at bindings was merely half-ass, necessitating a ton of boilerplate.)

        The success of Apple’s platforms has nothing to do with their technical quality. They are emphatically not best of breed; Microsoft still has the best developer tools, even if there’s a bit of needless reinvention going on in the House That Gates Built. And don’t think these are sour grapes from some ‘softie: I’ve only written native code for OS X and iOS since 2009, and am building new applications for the Mac that we hope to launch later this year.

        I’m just correcting your misperceptions of the developer-oriented technical merits of various current platforms. Apple understands that if the audience/relevance/profit opportunity is there, the developers will come—in direct contrast to Microsoft’s “Developers, developers, developers,” which masked an exploitative relationship (a story for another day). THAT is why you see best of breed iOS apps more frequently than Android.

        Be well. :-)

      • DesDizzy

        Oluseyi
        Good to have your technical input to this sort of discussion.

      • Oluseyi

        Glad to share.

      • Gopiballava

        Native C/C++ vs. baby Java phone apps? That’s utterly ridiculous, from a technical perspective.

        “Baby java” would be an accurate description of J2ME, an older version of Java that stopped being widely used (if it was ever popular) years ago. Android has a full featured implementation with a rich set of APIs to do lots of stuff.

        Programming for J2ME phones was an exercise in frustration due to low performance and a lack of features. Android does not share those issues. None of the computer scientists I know have complained about the Android Java implementation as a baby phone system.

        It’s easy to port C apps to iOS? No, it’s not. It’s easy to port C *algorithms* to iOS, but that’s a tiny, tiny subset of the majority of programs. As an example, porting a C algorithm that looked at an image and determined whose face was in it would be easier going to iOS than to Android.

        But you referred to C based client applications, and most client applications are heavily focused on the user interface side. Virtually all the time you are going to be re-writing the user interface and the networking code from scratch in Objective C. The architecture of how controls on screen interact with the back end code varies enormously between different UI platforms. The design work to make a desktop UI fit into an iOS screen is essentially just a re-write from scratch.

        So, no, the ability to port C code to iOS is minimally useful for most apps. (It was useful for OpenCV and ZebraCrossing, both of which I have used on iOS. But both of them have also been ported to Android, so I’m not seeing the benefits you claim to see)

        My background: I’ve coded in NewtonScript on the Newton, Python for WxWindows, Tkinter, a custom framebuffer UI, WindowsMobile, J2ME on cellphones and pens, Java on server side and client side, C and C++ on desktop and micro controller, C on 68k MacOS, Objective C on iPhone and iPad, C++ on SymbianUIQ and S60, Python on SymbianUIQ and S60, and JavaScript client side.

      • Walt French

        I think the consensus among developers is that writing a fine app for iOS takes longer than writing an app for Android. And the result inevitably ends up working a bit more snappily and looking a bit crisper.

        Fine apps are written in both, and in particular Objective-C’s development effort doesn’t appear to have limited the existence of many fine apps on iOS. So the advocacy seems out of place here when we’re talking about app availability.

        Personally, I’m no fan of either C or java, having learned a couple of languages that I consider substantially more appropriate and well thought-out before C was defined. But that’s irrelevant, too.

      • Pat

        I was mainlyntalking about software services (Gmail, Google Maps, web Search, Google Now, etc). Most people agree with this. I’m the biggest Apple fan, but their software service offering is lagging.

  • obarthelemy

    My try at answers:
    1- there already is a portfolio of 3-4 iPhones models available, with subsidized prices starting at $0. How many more do you want ? Do we need to pay you to take up our phones ? Running the risk of cheapening the brand in our high-revenue core subsidized markets by introducing cheaper models for non-core unsubsidized markets doesn’t sound like a good move.
    2- Both. And see 1-: many markets want value, we do luxury, so why bother ?
    3- We’re buying the machines, but subcontracting the handling of the slaves operating them, so we can pretend to be clean and keep the “those phones are a work of art” aura going and avoid legal liabilities. That way, we also get to lock the competition out of production sites, which is a key aspect of our strategy. Logistics/supply chain management is what I do, and our phones clearly don’t compete on features
    4- Because Samsung are the best Fab company that would deal with us. We don’t want the best anymore though: we’re playing politics now, so second-best (or third-best) will be good enough from now on.

  • jlapides

    I’d ask Mr. Cook what Apple’s answer is to the disruptive growth of the low to medium end of the market provided by Mediatek and its competitors. This probably includes 300 million to 400 million units a year now and growing rapidly.

    • JohnDoey

      Probably the same answer they give to eMachines: crickets.

    • http://twitter.com/leicaman leicaman

      Answer: That selling more units at a loss causes you to lose more money. The low end is of no interest. There, Android is actually winning. So what?

  • http://twitter.com/mieswall pablo bañados

    I would add a practical, and a fundamental question:

    -Practical: Is the buyback program to be distributed evenly month after month?. Are you concerned by the NET flow of money in the stock (some 9B in the two years ending september 2012, about the same out in the moths after that), of which a 1.8B of monthly expenses in buybacks is a serious support to the market, but any quantity above that would mean the peril of another parabolic bubble, making the buyback plan less practical? If committed to evenly distributed money, is Apple selling puts to ensure a lower price for the coming months, buying calls to keep the price under control? Is Apple responsible for the amazingly high Open Interest in 500 strike of calls and puts for June?

    – Fundamental: Ipod evolution may plot a three phased IOS products development: 1-Disruption: high income markets, high price; 2-consolidation: lower prices, broader distribution; 3- “harvest”: based on extended, loyal user base, income coming more than from the devices, from the services (iTunes) those devices allow. If so, would you say iPhone and Ipad are drawing this evolution path? Is Iphone already entering that second phase? Wouldn’t that explain the limited operators of Iphones until now, soon to be greatly expanded? Also the capex plan?

  • Luis Arturo Vargas

    I would also ask how are they going to deal with the fact that some Operators e.g. AMX have stopped heavy subsidies on their iPhones?

    • r.d

      bypass them just like Apple is doing in India.

      • Walt French

        You’d do at least me a favor by expanding on Apple’s carrier relations there and elsewhere.

  • Rogers

    My guesses to answers: 1) There is a portfolio, updated with a new device every year. The previous year’s products get less expense to buy, easier to build, and the software continues to be updated on those devices making them more valuable to own. 2) Because at each introduction of a new phone, we have been supply limited (in many components we are the single largest consumer in the world), along with some technology limitations (being addressed with each new hardware introduction). 3) Probably … that’s our plan going forward. To grow we need the supply chain on key components to increase. 4) See number 2 and 3 above.

  • A.S.

    One Q I’ve always wanted to ask, what’s the reason we had Schmidt on the board ? Give me one benefit we got from him, why did we blindly trust him to steal our mobile ideas ? Why did we let Android get ahead when we could have owned the apps ecosystem like windows in 80s?

    • Walt French

      Heh, Jobs, like every CEO everywhere, worked for the Board. In many cases, the CEO is also the Chairman, but the practice is often frowned upon.

      It’s unlikely someone who displayed Cook’s superb smoothness before Congress would make the rookie error of thinking his opinions about his management are of interest to anybody except his closest personal friends.

    • GC

      I don’t think they ever had the impression that Google wanted to become a competitor. I think they always thought that Google would be a partner and having Schmidt on the board facilitated that. Apple envisioned providing the hardware/OS platform with Google providing many key backend services such as search, maps, etc.

      Once Apple realized Google’s ambition, Schmidt was removed from the board and Apple began the long, and still incomplete, move away from Google and it’s partner Samsung.

  • dteleki

    Regarding #1, in a certain sense iPhone is ALREADY a portfolio product, with 3 different iPhones at 3 different price points:

    iPhone 5 ($650/$750/$850), iPhone 4S ($550), iPhone 4 ($450).

    And this product portfolio is indeed updated on a regular basis, i.e. once per year, in a conveyor-belt manner, with this-year’s new model dropped in at the top and last-year’s model and before-last-year’s model moving down in price, and 3-years-ago’s model dropping off the bottom into oblivion. Add the much-rumored “cheap iPhone”, and the more-or-less predictable this-year’s fall refresh, and the “portfolio” looks like this:

    iPhone 5S ($650/$750/$850), iPhone 5 ($550), iPhone 4S ($450), iPhone 5C ($350).

    One more year’s iteration, and pulling the “conveyor-belt” trick with the “cheap iPhone”, and the “portfolio” now looks like this:

    iPhone 6 ($650/$750/$850), iPhone 5S ($550), iPhone 5 ($450), iPhone 6C ($350), iPhone 5C ($250).

    And this is before we even CONSIDER what I personally want to see added into the portfolio, namely a large-screen iPhone that has the exact same resolution screen as the iPhone 5 but with iPad-sized pixels, which comes out to about a 4.9-inch screen, that if introduced at the same time as the iPhone 5S could be called an iPhone 5L (for “large”).

    Of course, Tim Cook is never going to publicly discuss FUTURE expansion of the iPhone “portfolio”, but he can certainly point out the 3-model “portfolio” that is already here.

  • OviP

    Answering any of those questions in too much detail would divulge present and long term strategic strengths and weakness.

  • poke

    Are these questions all related? Apple is supply constrained, setting up its own fabs to meet demand, but can’t diversify or expand into new territories until it has those fabs online.

  • r.d

    Come one Horace, you youself have answered these question before.

    1. Because 2 year contract which secludes any kind of lower price item to undermine it. The subsidy would disappear.

    2. Because Apple forces operators to buy certain # of iphones and most are mom and pop virtual cellphone blah blah blah.

    3. CNC machines cost a lot. Chip equipment cost a lot, lasers cost a lot. robotic for US factory cost a lot. Don’t you want us to invest in our business of monosomy.

    4. Because Apple thought Google would be able to copy because of patents.
    Same for Samsung. Apple has to deal with Samsung whether it likes it or not.
    Just look at how many patents Samsung has for H265 the 4K standard codec.

    Any other questions. you have already answered in your previous articles.

    • http://twitter.com/asymco Horace Dediu

      Even if I suggested answers in the past I would like to hear Apple’s responses.

  • anonymiss

    As if Kara and Walt would ever ask this. They just want to maintain their relationship with Apple. The questions last year? hardly compelling. It’s an advertisement for the conference that the Apple’s CEO shows up.

    • anonymiss

      *That Apple’s CEO shows up.

    • Walt French

      Pretty obvious that Cook knows how to say, “I’m not going to talk about that today” in much more interesting, and non-disclosing ways. The K&W team will make a good guess about what’s most interesting for the audience — that will actually get answered — and build the list from that.

      Apple doesn’t particularly NEED the WSJ, but there’s no reason for an awkward question or two — in contrast to the NYT’s Joe Nocera’s calling Cook a liar this week — to disrupt the relationship.

  • BC2009

    Are we to assume that Apple is going to start fabricating its own chips given their capital expenditures?

  • Doctorossi

    I don’t understand question #1. Last time I checked, the iPhone was on pretty much the same refresh schedule as the iPad.

    • Boomer

      He wants to know why Apple is treating Cell Phones differently from their other product lines. which all feature multiple distinct products.

      • Doctorossi

        Last time I checked, the iPhone also features multiple distinct products.

      • Klasse

        Only one is new each year. This is not the case for the other product families. Why not have e.g several screen sizes?

      • Doctorossi

        Until only the most recent update, the same was true of iPad.

        There are three models of iPhone available, each in different storage capacities, as well. ‘More for more’s sake’ has never been a compelling reason for Apple and I don’t think that attitude has failed them.

      • dteleki

        For now, newly-manufactured specimens of the older models of iPhone (i.e. 4S and 4) do NOT come in multiple storage capacities — only the LOWEST capacity that they offered when they were top-of-the-line. Same goes for iPad 2.

        Part of the “conveyor-belt” strategy seems to be: an option for higher-than-rock-bottom storage is one additional feature that differentiates the top-of-the-line model (i.e. this-year’s model) from the older, less feature-rich, cheaper models further down on the conveyor-belt.

      • Mark Jones

        Although there are multiple iPhone models, they are the same “product”, just last year’s model. For now, Apple is also doing this for the iPad.

        For iPod/Mac and now iPad, there are distinct products for different user use cases:
        – iPod: shuffle, nano, touch, classic.
        – mb air, mb pro, iMac, Mac mini, Mac Pro
        – iPad, iPad mini

        (If retina models are intended to be a different product, then iPad retina and mb retina get added to the above lists. I don’t think Apple intends to keep and update both non-retina and retina models beyond one more mb pro iteration.)

      • dteleki

        For the moment, iPad is also on a “conveyor-belt”, a 2-position one as opposed to a 3-position one as with iPhone. If some of the rumors about the specs of the next iPad are true, iPad could end up with a 3-position “conveyor-belt”, at least for one year: yes thin-and-light, no Retina, low price; no thin-and-light, yes Retina, medium price; yes BOTH, high price.

        I’m guessing that iPad mini could end up with a 2-position “conveyor-belt” when the Retina version comes out.

        The “conveyor-belt” approach is a sly way to do line extensions to a product line on the cheap. It works best if there are MAJOR new features introduced between models, to differentiate them. In an interesting anomaly, the iPad 3 was subtracted out of the MIDDLE of the conveyor-belt, instead of dropping off the bottom.

  • http://twitter.com/leicaman leicaman

    Why are you ruining the Mac ecosystem with sandboxing?

    • dur

      Sandboxing is only in the Mac App Store. Are you upset about the Mac App Store?

      • http://twitter.com/leicaman leicaman

        Yes, anyone who uses a Mac professionally can’t find sandboxing a completely good thing. It does have some good characteristics, but in the end it threatens functionality for application interoperability. It’s already crippling software that developers have to offer alternatives for high-level users by distributing more functional variations outside the store.

        And that would be okay, except it’s possible Apple might try one day to go the iOS way and make it the only option. But as John Gruber points out, they probably won’t ever replace OSX with iOS but they might offer an iOS laptop as an in-between option.

        But as the store stands now, many Applications already aren’t allowed in at all, or in a crippled form to some degree. It’s a threat to those of us who use Macs in our jobs, and who have been long-time advocates of the superiority of Macs for productivity. AppleScript (which itself is changing, sometimes in not good ways) is one example of that superiority. I’m optimistic Apple won’t go down the wrong path here, but at the moment it seems they’re playing a dangerous game.

      • Walt French

        “And that would be okay, except it’s possible Apple might try…”

        The Apple Store and its restrictions have plusses and minuses for users and developers. Users get an additional buffer against malware and code that doesn’t perform what it claims; purchasing and updating is very easy. Developers have to focus more on single-functionality, possibly embedding functionality (“bloatware”) that they’d rather interoperate with another app for. But they get a very easy marketing arrangement, less tech support hassles from nasty interaction from other apps, and a clientele that knows their apps are good, and legit (less likely to get pirated).

        It seems to me that much of the noise about restrictions comes from a very pro-Android camp who are not so much worried about Apple and its clients, as about a changing of the guard from a world where the elite do whatever they damn well please, to one where you pay your money and do whatever you’re provided with tools for.

        Myself, I find myself in the middle. Some of my favorite utilities can’t go thru the store because they tap into interaction in disallowed ways. OTOH, I struggled through several months of an old extension destabilizing my machine, while I had long forgotten it.

        I presume that Apple is not so foolish as to cut off their nose to spite their face. Developers are tremendously important to Apple, and the Mac is a small enough platform that losing iOS developers’ goodwill, just to lock down OSX a bit more, would be a really dumb move. Apple is capable of dumb moves, but I think this, like the need for a dev toolkit on iOS, has been made completely clear and I don’t think you’ll need to worry about it.

      • http://twitter.com/leicaman leicaman

        I’m optimistic because I think you’re right. What worries me is some developers go Mac App Store-only distribution. I get the appeal. And it seems like developers mostly see how the restrictions cause problems for users, and the value of having two versions where it has become too restrictive for core functionality. As long as there are workarounds for the issues that concern users, I’ll be a happy Mac advocate.

    • Joe

      To soften the blow when they eventually replace OSX with iOS.

    • Space Gorilla

      Almost nobody even knows what that means. I have a basic understanding and I don’t care. What I know from a user perspective is the Mac App Store is great!

    • Slurpy2k12

      From what I can see, the mac ecosystem has exploded since the appstore. I’ve never discovered so many useful, fantastically designed Mac applications, for so cheap. I would say it’s the best thing to happen to the Mac in the last decade. Also, the vast majority of people won’t feel the effects of sandboxing, and it has very real security/reliability/stability advantages.

  • Walt French

    Given the respect that the ATD gang shows to Horace, I wouldn’t be surprised that they ask one of the questions with attribution.

    These are all good questions and it’s interesting that they all suggest the Tim Cook’s expertise — supply-chain management — comes up as a likely reason for each anomaly.

    Alas, it seems very un-Applelike for Mr. Cook to give satisfying answers to any of them: there are pat answers (eg, “we’ll continue to make the very best, most satisfying products that we can” for #1) and anything much beyond that would be tipping their hand about future products or competitive positioning. Apple will announce a broadened iPhone line, more operator deals, capex and any vertical integration when it best suits its relationship to prospective customers, not analysts, techies and competitors who’ll play amateur Kremlinologists with Cook’s every word at the show.

    Think about the (rather massive) data center they recently built in North Carolina. Fan sites were all over it, but when I add “apple.com” to my Google search, I only find it on their “environment” pages, where they tout their commitment to sustainability. (Ditto for the pending center in Reno, NV.) They’ve released almost nothing about the technologies. The tour of their iPhone radio lab that they granted to newspeople and tech bloggers was only in response to antennagate.

    I’d be delighted to hear answers to any of these but think we’ll have to settle for hearing what it’s like being CEO of such a company, some positioning about their relationship to Washington, and a whole bunch of softer stuff.

  • dreyfus2

    #1 Apple’s first, and obvious, focus was markets with subsidies (the fact that they tried a revenue sharing model first does not change that, carriers that do not, or are not allowed to, offer subsidies won’t share revenues either). They covered the 199, 99 and 0 price points there without creating much fragmentation in terms of screen sizes, app support etc. Can’t get much broader than that.

    From the iPhone (1) to the iPad Mini they have never touched the screen aspect ratio. This allowed for hundred thousands of high quality apps and broad developer support. The iPhone 5 was the first deviation from this strategy and even Apple hit a brick wall here. There are still hundred thousands of apps that have not been updated to utilize the iPhone 5’s screen properly (despite huge sales). What would be the benefit of adding another ratio or scaling factor?

    What Apple may want to address is markets without subsidies / prepaid markets. Even the two year old iPhone 4 is $600 in many markets (with very limited storage space). If they even want more market share – that is where it is. If they can’t get under $400 without making an product not worthy of the Apple brand, they shouldn’t.

    #2 How many of these additional carriers do have relevant sales of premium phones? How many of them are MVNOs with bottom pricing, how many are prepaid only? How many of them do operate on different frequencies, requiring separate SKUs (and what would be the minimum product runs to make that even reasonable)? How many are not even offering 3G? How many are not offering 4G? How many people in these markets would buy a $850 iPhone 5, to operate it on a network that does not have 3G/4G?

    The 800 number, without further details, does not tell me a lot.

    #3 Apple did build additional huge data centers, they build a new HQ, they bought tons of machinery for the manufacturing partners (Unibody production, touchscreen “lamination”, iPhone 5 chamfering and photo analysis…). What this adds up to, I do not know, but it is certainly not trivial. It would certainly make sense for them to have own chip manufacturing. But Cook would certainly not speak about it, before it is ready.

    #4 Not sure about the relevance of this question?! Apple did start to work with TSMC in 2011 to address that. How many other phone makers do use more than one chipmaker for one phone model? (Serious question, I do not know.)

    • http://twitter.com/JessiDarko Jessica Darko

      To support the new iPhone screen size for most apps (possibly excluding games but not necessarily) … all one has to do is build with a modern version of Xcode.

      Apple will stop accepting apps into the store that don’t support the iPhone 5 screen size. I think they may do something to force apps to upgrade in iOS 7.

      It really is shockingly trivial to support the 5s screen.

  • Walt French

    Unless and until Cook uncharacteristically opens the kimono about #3 and #4, I think we should keep a few points in mind:

    1. Otellini’s (BusinessWeek?) interview stressed that Apple had approached Intel about its iPhone project early on. Wikipedia sez Project Purple was underway in 2004. Apple announced the switch to Intel chips in 2006; let’s presume they did not commit until 2005 and so had little leverage for its oddball project.

    2. Also during 2004, Intel announced XScale processors (the 270 series) that appears to me to have been approximately equal power to the CPU that Apple eventually had Samsung build. In some regards (vector math, important for digital audio/graphics), the Intel chip may have been superior.

    3. Despite having a product on the shelf, Intel refused to commit at the price Apple indicated. Intel in fact sold their ARM business in 2006, for $600 million. Apple certainly could have bid on that business, but apparently Jobs must have seen it as an unnecessary and even risky move, and didn’t: if Apple were unable to use the devices, it is very unlikely that competitors would buy from them. The iPhone had not yet been announced and Apple was already betting the farm on it. I will speculate that Jobs could not then have gotten Board approval.

    4. Marvell, who bought Intel’s ARM/XScale business, is fabless: the deal would not have included facilities to actually produce chips. Apple would’ve had to go to somebody like Samsung or TSMC (who fabs for Marvell today), anyway.

    5. Apple bought PA Semi in 2008 for about $300 million and the same year took a small stake in Imagination (designer of the PowerVR graphics part of the A-series and Intel’s Atom line) that values the whole firm at very roughly $150 million). To get to its current IP levels, XScale and these two top $1 billion, and Apple still would not have any fabs.

    6. Intel today has over 100K employees, a quarter more than Apple (AMD, with no fabs: 11K). Top-shelf CPU design, management and fabrication is incredibly complex. The company’s market value is about $120 billion (vs AMD’s $3 billion). A large part of the difference would seem to be Intel’s fabs and fab-specific engineering talent.

    Build-vs-buy decisions are tricky. I have laid out that Apple would have had to spend huge amounts of money to bring complete control in-house, and no matter who they rely on for outside help, they would be funding a competitor. PA Semi famously bled employees after the deal, so in a couple of years, it would be quite likely that another outside shop was the new bleeding edge.

    Apple obviously had no inkling how quickly Android would fuel Samsung to become their (virtually sole) competitor and so went with them.

    It appears now that Apple is contracting with TSMC to fab chips, chips that it has finally reached critical mass on assembling CPU expertise. Very likely, the capex is for equipment that Apple will own but that TSMC will operate and manage. Apple is again choosing to not own the full technology and expertise; TSMC makes chips for AMD, Qualcomm and others whose chips power others’ phones and desktops. (E.g., Galaxy S4’s sold in America are said to use a Qualcomm chip made by TSMC).

    I believe that advanced semiconductor capability is a smart function for Apple to take more control of. At the same time, doing so brings a major step up in complexity; the risk of your own technology being leapfrogged by another’s such as Intel’s; the near-certainty of either excess or inadequate capacity; Moore’s Law making last-gen (e.g., MediaTek) designs quite good enough and much less costly, obviating your technical advantage; and many other risks.

    Apple may have given Samsung a bit of a profitability and insight boost by hiring them for semis, but I think that without the “stolen” Android that Apple didn’t expect, that would have had only a tiny impact on the Apple/Samsung choice. Likewise today, given the uncertainty around where the phone business is going and sharp limitations in expanding into either the corporate desktop or datacenter, Apple is smart to emphasize its flexibility and not commit — possibly, overcommit — many billions into “owning” its CPU/GPU destiny.

    • Pat

      Why on earth did you waste this brilliant peice of writing on the comments section?

      • Walt French

        I believe that at least 13 people have read them, including you. Horace seems to scan all the way down the comments list. And my comments in Gassée’s thread (MondayNote.Com), where he noted the Otellini interview, provoked little interest in delving into the rather more involved analysis that real-world, multi-billion-dollar strategies entail.

        And I’ll add one more point: Intel absolutely had a solid understanding of what Disruptive Innovation was all about. Their decision not to snuggle up more closely in bed with Apple had to have been nuanced and well-reasoned, wrong as it looks in hindsight.

        If you want to reward this type of comment, bring on corrections, amplifications or alternative perspectives. I write to understand.

      • http://twitter.com/JessiDarko Jessica Darko

        I think Apple and Intel would be a good matchup. I’m at a loss for why this won’t happen. Intel has the best process technology, and some of the best fabs, and it is losing in the mobile market. Intel needs to start growing again, it is in a “be the company” situation once again. Apple needs a partner that can deliver best in class products.

        It seems that Apple, having an ARM master license, could design the chips in cooperation with Intel. Possibly via a joint venture they both own, to be produced in Intel fabs. Intel has done JVs with the likes of Micron. This JV could get cash and the design from Apple, and a fab and process tech from Intel.

        I don’t see tsmc growing fast enough to meet Apple’s needs, and with tsmc, Apple will always be a generation or two behind.

        I think the combo of Haswell / 3D lithography (“tri-gate” I think it’s called) and Apple’s ARM designs would put it ahead of the competition….something it kinda needs now that android has been able to steal the UI crown jewels.

      • Walt French

        Technologically, I can’t imagine what would work out better for Apple. But while I don’t know the new CEO’s line on these things, Intel has some serious business problems with helping to undercut its X86 business.

        And let’s be clear: if Intel wants to grow its business from here, it will be by replacing extremely profitable X86 CPUs with barely-profitable ARM chips.

        Typical disruptive technology; not their fault, etc. But they have apparently resisted it for a long time and probably want to drag their feet as long as they can. Is it the time yet? Personally, I think the time is past. But I don’t run the place and haven’t examined the detailed financials, etc.

      • http://www.facebook.com/shawn.dehkhodaei Shawn Dehkhodaei

        While I believe Intel has probably the best fabrication technology in the world (it’s been their single saving grace, since their actual CPU engineering is very poor), I don’t think they would necessarily be a good match for the mobile market.

        You see, small, nimble, progressive, power-consious is simply NOT in Intel’s DNA. For many decades, they were the “SUV” manufacturer in the CPU market. They only switched by pressure from the market and resurgence of laptops. In that field, they still haven’t been as successful as they could.

        Intel is a type of company that values legacy and deep compatibility over all else. They’re willing to preserve their archaic instruction set from the 1970’s in the name of compatibility, and yet stay far behind the curve, when it comes to modern CPU design.

        If you notices, NONE of the post PC era devices use Intel chips … Game consoles, set top boxes, smart phones, routers, tablets, etc. There is a reason why.

        I think in fact TSMC is perhaps Apple’s best partner in this case. They’re completely impartial to Apple’s success, and they’re large enough to act quickly, and small enough to be hungry for new business.

    • Greg Hemphill

      Great comment and insights. This does deserve to be a whole post.

    • Brrriiiaaallliiiaaannnttt

      @walt you nailed it with the TSMC connection, they are the only fab capable of replacing Sammy fully, and if you look at TSMCs capex, it is apparent that it is for AAPL…or….AAPL…

      Btw: been buying tsmc for a couple years now based on AAPLs obvious need to move away from Sammy and TSMCs unique ability to replace Sammy completely…instinct bet, not much to back it, we’ll see…

      • obarthelemy

        Intel also could replace Samsung, and they’ve said they’re open to outside customers. I’m actually surprised Apple still don’t go that route.

      • Antonio Fonseca

        Seems to me that Apple wants to control their own future, so replace the Samsung by Intel would not be the smartest choice here.

      • obarthelemy

        That’s exactly why I’m saying it’s a political decision. Both Samsung and Intel have better Fabs, but Apple want a supplier they have leverage against.

      • Antonio Fonseca

        Right.

  • davel

    These are great questions.

    I would ask about software. Something on the order of how does Apple envision the extension of their software franchise and extending it to non Apple products ala iTunes. For example Siri. Although it is an Apple only product and not on all products, if given room can be a powerful Apple platform to enable many things. Or Maps. Same thing ala Google.

  • dc310

    Gee wiz Horace. Your such a fanboy soo in the tank for Apple with asking such easy softball questions. . (Great questions!)

  • Space Gorilla

    I would like to ask when I’m going to get one terabyte of storage with my iCloud account. Use some of that cash pile to give me a ridiculous amount of space in the cloud for all my iOS devices.

    • unhinged

      I’d rather have it working properly first. Thanks.

      • http://twitter.com/NetOpWibby ポール ウェッブ

        Hah! This guy wins.

      • Space Gorilla

        That goes without saying, I agree. But it needs to also be a ton of storage space. My kids all have 64 GB iPads and they always need to archive things on our family iMac to make room. It’d be slicker if they could use iCloud. But yeah, iCloud needs improvement.

      • Laurent Giroud

        This is an understatement, before it needs improvement iCloud should first work correctly.
        I hope that a solid iCloud platform will be one of the great news of WWDC because as it stands now iCloud is a technical failure and a consumer annoyance.

        (And my apologies for the irrelevance of this comment to the article topic.)

      • obarthelemy

        Or you could request an SD slot :-p

      • sdhater

        I hope they never include an SD slot, but luckily I don’t think they’re that stupid.

      • Space Gorilla

        Yeah, I don’t need yesterday’s solution. I want my stuff in the cloud. Thanks.

      • obarthelemy

        you don’t travel a lot do you ? the cloud is not accessible while en route, and very expensive, if available at all at the speed required for HD videos, once abroad or in a remote place, even in cities in my home country more often than not….plus it’s not practical for my 3+TB of media.
        The cloud is fine for light, sedentary users. I’m not one of those.

      • thatsalottacards

        You have 3+TB of SD cards?

      • http://twitter.com/JessiDarko Jessica Darko

        Dude, you’re so behind you can get 3TB on a single SD Card! ….theoretically. Oh, and the access rates on SD cards is really quite terrible. That’s why they’re cheap, they’re remainder flash chips that didn’t make the cut, for remainder devices sold to people who buy on price alone and don’t mind cheap plastic crap.

      • Space Gorilla

        I get a kick out of people who think their personal use case translates to them being better than others in some way. You’re not. Your use case is simply different. Most people don’t travel much, it doesn’t mean they’re light users or not real users, or not as hardcore as you, etc. I don’t want a bunch of SD cards that I have to sort and store and take care of. I had my fill of that with Zip drives, CDs, DVDs, etc. I tried ‘em all. SD cards have all the same problems.

        I want a solution in the cloud all in one place and searchable, plus of course much larger internal storage on the iPad, but the cloud works better for what I need. That in no way makes me a light user. And any destination is going to have good wifi, it’s not difficult to sync up any files you forgot to ‘pack’. Plus the benefits of collaboration and sharing that come with the cloud, it’s so much easier.

        I’m also not sure what your idea of expensive is, no cloud solution I’ve seen seems expensive. And an expanded iCloud is sure to be affordable.

      • obarthelemy

        Indeed. Who started off by ridiculing the other’s setup again ? Oh yes: You. Self-incrimination is the funniest.

        You might be proud to be using the latest iteration of mainframe (50s-70s) client/server (90s), then cluster, then web service (00s), which some clever marketer rebranded Cloud (10s). Some people remember history, and we get a chance to not repeat it. An autonomous PC is better than a slave PC in a lot of cases, and your “that’s soooo last year” argument is both wrong and ridiculous.

        Also, not all destinations have good wifi, and 0 means of transport do. My parents don’t even have good ADSL, so whatever wifi I tacked on to that doesn’t work when it’s raining in the late afternoon, because ADSL doesn’t work either (don(t ask… 6km from local station). When waiting for a business appointment, you usually can’t login the hosts’ company’s wifi, or it’s a bore to request credentials 4 times a day, especially when you got to bother a foreign client’s network admin…

        So yep, I got Cloud. Good for working on documents with faraway colleagues. I can even work on my local copy while traveling and sync changes when I’m back online (especially if colleagues don’t modify the same docs in the mean time…). Cloud hosting 3TB of media files would cost a bundle though, actually 2 bundles, with the backup.

      • Space Gorilla

        Actually it was you who started with the SD slot comment. SD card = Zip drive/CD/DVD/etc, which I view as yesterday’s solution. And that isn’t what I want. I want Dropbox but slicker and much larger. I do not want a bunch of cards storing a terabyte or two of files, apps, data, whatever. What the heck would that cost anyway, a couple terabytes worth of SD cards?

        I suppose a single wireless storage drive might do the trick, I think Seagate makes one of those. But I never, ever want to go back to sorting through a bunch of small storage disks/cards to find the files I need. Ask any pro designer about inserting Zip disk after Zip disk to find that friggin’ file you need. Pain in the ass. Or ask my kids about their Nintendo DS cartridges, which they are always misplacing. Multiple tiny physical storage devices are not an elegant solution.

        Re: wifi, maybe it’s different up here in Canada than most places, we’ve got free fast wifi all over the place. I’m on an acreage, using wireless high speed, and I’m 20 km from the signal. Works great.

      • obarthelemy

        This is not a yesterday vs today question. Centralized computing, if anything, is older than personal computing. The issues with centralized computing have been the same for decades, chaging the label doesn’t change the underlying features and constraints:
        – you need a connection
        – you need a fast enough connection for what you’re doing (ie, you need good LTE or good wifi for streaming 720p/1080o movies).
        – you need the 3rd-party server to be up (no SLA for consumer stuff)
        – you need to pay the 3rd party server in some way ($ or ads)
        – you need backups, either they do them for you (which they don’t: read the Service Agreement), or you do them yourself

        The advantages are the same too:
        – you can change terminals
        – possibility of multi user
        – possibility of concurrent multiuser
        – you don’t have to administer your own server
        – you get some CPU/storage elasticity via flexible quotas

        If you insist on putting a timestamp on it, it’s more 60s (centralized) vs 80s (personal). Concepts have a weird way of enduring.

      • Space Gorilla

        I’m talking about centralized storage, not a thin client with some cloud OS. The solution that works for me is iCloud but with much larger storage, or as I mentioned earlier a large external device such as the Seagate wireless drive. My point stands, multiple tiny physical storage devices are not a good solution. Since a one terabyte iCloud account is only a dream at this point I’ll have to look at the Seagate drive, and others like it.

      • DesDizzy

        O I work in risk management. There are no perfect solutions. There are however, best fit solutions for personal circumstances. As you say SD cards have their utility, until you lose or damage one and the cloud has its utility, until the service goes down.

        We know that your use-case tends towards utilitarian, however, I am curious as to what country you reside in.

      • obarthelemy

        I’m in France, but travelling a lot for work and family
        – my home has so-so internet, for some reason even though it is in the city, it is very far from my NRA, so DSL speeds are quite low. Fiber is coming in a few months.
        – my elderly parents are far out in the country, DSL is marginal (the only company that accepted to link them up most probably had a bad database, 6km from NRA, 80dB attenuation, DSL is out daily…)
        – my brother is in Canada, good DSL but metered (in 2013 ??!!) and horrendous GSM prices, metered too.

      • http://twitter.com/JessiDarko Jessica Darko

        Add an SD slot and now you have 4 problems.

      • Walt French

        Absolutely, Siri needs to be smarter, and work with more knowledge engines. Maps is great with the clever way thru commute traffic onto the Bay Bridge, but needs to stop trying to route me thru the carpool-only onramp. Developers are practically up in arms over iCloud.

        But these are not questions that ANYBODY would waste CEO bandwidth on. Maybe as part of a more general “tell us about Apple’s commitment to top-tier services.”

  • Pingback: Horace Dediu has four questions for Apple’s Tim Cook – Fortune (blog) | DailyTechTrend()

  • Dan

    What the author meant was that Apple should have a large screen phone, a regular size phone, a cheaper phone for those that really love Apple and want to get on it. This is so important as once they start with Apple they might spend more money on aps and services. Also they could upgrade later to a better iphone.
    Let me explain. Since there is great stickiness with the ecosystem, many would not want to get involved where it is hard to leave if you dont have choices. Let’s say you can live with the 4 inch screen but you know that one day you may need a bigger screen as your eyes start getting worse. You might not want to go with Apple unless they can accomodate that need.
    Because Apple almost went bankrupt, Jobs instilled the fear of overextending. Thus they keep it simpler. But now they need to extend themselves.
    Apple must must must get a larger screen and a cheaper phone. Nick Nansen said that in his last words he had on his sight before he stop writing about Apple. He gave up with Apple partly due to that.
    I have long called for Cooks resignation because he just seems to be doing things that go against good business practice.

    • François Prigent

      The author doesn’t mean anything, he states data and comes an analysis from data. I tend to know why Cook resigned, but don’t exactly see your point in this particular comment.

      • Nicolas

        Cook resigned?

      • http://twitter.com/JessiDarko Jessica Darko

        I think it means something different in the original french.

    • obarthelemy

      For those who think ahead, the “single provider” issue is going to stay, whether Apple offer a full range of phones (cheap, regular, XL) or not:
      – there’s always going to be models missing: rugged, keyboard…
      – you’re never sure what Apple will change or cut next. High-end desktop and server users have been left in the lurch for several years now. Despite commitments to the contrary.
      – there’s a significant risk Apple will keep not implementing basic features: right now, it’s FM radio, SD card, full BT and USB stacks, NFC, USB charging, widi/miracast, dlna, LAN/USB file access, widgets, multitasking, background synch… in the future, what more ?

      Apple are in the luxury game, not in the market saturation game. As a customer I deem that too risky a commitment, even if the product were interesting to start with.

      • James

        @obarthelemy. If you were truly thinking ahead, you would avoid Android like a plaque. As soon as Samsung switches from Android to Tizen(I estimate in 2 years), all your Android ecosystem investment would be obsolete, unless you are willing to settle for a hugely inferior hardware.

      • obarthelemy

        you’re too late, I already switched to Huawei Ascend Mate, at least for my phone. I miss AMOLED, the rest is Ok… 1cm bigger, 36% bigger screen than my Note1 (236% of an iP5), and half as expensive as an iP5/gNote3 (presumably)

      • James

        Huawei Ascend Mate only proves my point:
        “…older processor, 3G-only data, only 4.68GB of accessible storage, no NFC, and mostly recycled camera technology.”
        http://www.engadget.com/2013/05/23/huawei-ascend-mate-review/

        And ugly as hell.

      • obarthelemy

        it’s a tool, not a fashion accessory…. and once in the usual sleeve, it looks like all phones do. Also, I don’t find it ugly to start with, not that it matters.
        That’s 4.6 + 64 GB, you forgot the SDXC slot.
        Performance is fine, especially WiFi is excellent. Camera is OK, I don’t print photos anymore.
        The big selling point is the screen, which is excellent and huge: 6.1″ is to 4″ what 23″ is to 15″ on the desktop. I’d never go back to 15″…. nor to 4. I’m getting older so DPI doesn’t even matter… it’s purely a size thing.

        I’m sure others disagree with my compromises… It’s great to be in a rich, varied ecosystem where choices abound.

      • sauk

        Android ecosystem is for people who can’t afford an iPhone. Whenever you whip out your Huawei, everybody around you instantly knows you are poor.

      • obarthelemy

        Yep. I also don’t drive a BMW, don’t purchase brand-name clothes habitually, and so on.
        Funny thing is, I could if I wanted to. I just don’t… and buy on specs rather than label. I guess working in marketing/sales has made me very cynical regarding upmarket brands.
        A very positive side effect is that … people… like you… leave me alone :-)

      • sauk

        I bet girls leave you alone too. Great life!

      • http://twitter.com/mieswall pablo bañados

        No, you don’t. You instead loose all your time posting hundreds of stupid posts in this site.

      • Slurpy2k12

        And some of us would not find a tool that has less than 5GB of accessible storage a useful tool at all. Thats a dealbreaker for most people. Also, an SD card is not a replacement for internal storage, and has a ton of limitations and complications (backup, can’t run most apps on them, slower, etc). But I’m sure you knew that.

      • obarthelemy

        All of what you’re saying is untrue though, except for maybe the speed.
        I would not consider a tool with less than 64GB (ie, $1k for the equivalent iP5 in my country, that’s one of several dealbreakers for me)
        the SD does backups perfectly, can install *all* apps on it, and i’m not noticing any slowdowns.
        but i’m sure you know that.

      • Slurpy2k12

        Pretty amazing that Apple can sell almost 40 million of a “luxury” product in a single quarter, no? Not to mention the iPad (is that also in the luxury category?) that is massacring every other tablet in existence. “Risky” indeed. Buying an Apple mobile product is pretty much the safest investment you can make. Guaranteed OS updates for 2+ years (at least), the strongest developer support in the industry, the highest resale value in the industry, with the best suport in the industry- from the richest company in the industry

        Really, what other product from which other company is “safer”?

  • http://search.websonar.com:8080/ Duane Bemister

    Could it be that Apple has already disrupted the iPhone and is now proceeding with Plan A, which originally was the iPad communicator?

    • Walt French

      AFAICT, nobody has yet noted that Apple’s response to the cheapo netbooks was to blow them out of the water with iPads. Utterly destroyed the category, methinks.

      In hindsight, the iPad was pretty obvious. How they could do it versus very low-cost, hardly-usable phones is more of a challenge.

      Here are some parameters that will affect whether/how Apple similarly blows away cheapo phones:

      1. The very lowest-cost phones talk to 2G networks. These are painfully slow for the sort of things I take for granted on my LTE phone. There’s no sense having a nice phone that can’t do anything a throw-away one can, so Apple will need there to be an incredible capital investment before the market can be theirs. Interestingly, they have a boatload of non-US money sitting around, but I cannot conceive they try to end-run existing carriers; rather, I would envision an Apple-specific processor at each point-of-presence that would provide extended services to its customers while providing some generic capability to the carriers.

      2. Moore’s Law rushes forward, making CPU capability ever less expensive. A dedicated support network as in #1 means individual handsets can get by with much less of one. Significant cost reduction.

      3. But not the biggest: battery and screen need trimming. Probably, sub-Retina resolution but not much smaller screen, for a modest cost advantage; certainly a lighter-weight battery. I went straight for 64 GB on my latest phone but a smaller capacity ought to work great, especially if iCloud is always nearby. In aggregate, this might cut build cost by a third or more.

      4. Best way to REALLY cut costs: make the nano a communications pack—possibly, screenless/Siri-driven—with a distinct iPad for displays and ordinary computing. The nano would need only sufficient capability to work standalone, meaning much smaller screen, etc; again: less battery, weight. I’d even look at it docking onto the iPad.

      Remember that Sir Jonathon was part of the original iPhone team; he can’t be spending all hist time deciding what shade of gray all the iPhone icons are. For each one of these wild ideas, Apple has built prototypes or mockups for another ten, trying to find the sweet spot of usability and price.

      Also, defensibility. We’re finally seeing HP copy the MacBook hardware very well, but there’s still the OSX moat. Only #1 above expresses a model that only Apple could perform, and I haven’t begun to work out—never will—what the economics are. (Horace has said, perfectly correctly, I suppose, that the telecomm business model is a dead end.) But Apple is now at the scale that they could be thinking about a proprietary AppleNet, running like a MVNO over the world’s telecomm infrastructure, as part of those carefully-negotiated deals.

      Well, we *ARE* talking about the future, and we *ARE* talking about the biggest, most connected tech innovator on the planet, so why not imagine a service network that’d bring the most advanced capabilities to the hugest number of people?

      • http://twitter.com/JessiDarko Jessica Darko

        The iPad is obvious in retrospect only. I considered the netbook issue at the time very seriously and attempted to predict what Apple would do. I was not able to come up with the iPad. In fact, when the iPad was being rumored, I was dubious because there was no compelling use case that I could think of. It wasn’t obvious that the iPad would kill the netbook.

      • Walt French

        Agreed, there is some genius in Apple’s moves. And when they let us know how they handle the inexpensive iPhone issue, it’ll again be obvious that they’ve outsmarted everybody else.

      • obarthelemy

        Apple’s forte is taking someone else’s geeky, undesirable product, and make it socially valuable and easy to use. That’s what they did with touch smartphones and tablets, but that requires an infant product category for maximum impact, which “cheap smartphones” isn’t. iWatch stands a better chance to make a huge impact, though I’m almost as doubtful about watches as about glasses.

      • Walt French

        I think you’re somewhat right here. But it’s not just the “infant category” where Apple has succeeded in the past. Take fr’instance netbooks (aka less expensive, highly mobile, smaller-screen computers primarily for web access and independent of Windows) that were bowled over by iPads and similar touchscreen products that took Apple’s cues.

        How — and even, whether — Apple re-defines the mass-market voice- and text-phone market remains to be seen. But while that market it not immature, technological changes are coming to it, just as certainly. I’m quite confident that in ten years, the standalone phone will be incorporated into multi-function devices, just as iPods’ functionality has mostly been subsumed into smartphones and microtablets such as the iPod Touch.

        If you like heresy, try the idea that Jobs, as Product Manager for iPods, merely did a workmanlike job of deciding what a follow-on would be for it, then decided to morph iPod into the 3-mode, “wide screen iPod, mobile phone and revolutionary touchscreen internet communicator.” Paying attention to maintaining his current business by doing a first-class, careful (and non-“iterative”) analysis of what people would be doing in 10 years.

        If it is really that mundane — and other “real artists ship” and “why Apple doesn’t do concept products” memes reinforce the notion — Google is wasting its time on never-to-be-widespread Google Glass, and non-productizeable Cars, while someplace at 1 Infinite Loop, a couple of teams are dedicated to polishing some amazing stuff, possibly including communication tools that could work for several billion people.

      • obarthelemy

        It’s not obvious the iPad did. Wintel did their best to block the format, too. There’s some overlap, but 50%, not 100%

      • Slurpy2k12

        It’s obvious to anyone who has a shred of reason, rationality, and perspective.

  • Brrriiiaaallliiiaaannnttt

    First of all, excellent questions Horace…My 2c

    1. It will be a portfolio product within 24-months – 3 models – iPhone, IPhone Mega 5in, and iPhone Budget – AAPL is waiting for the right tech / economics to release the other 2, should be within 24 months

    Note: The iPad was alone until the iPad Mini late last year. It almost didn’t happen. I guarantee they almost held off since the weren’t able to do a retina version. Luckily they did, and it was the most successful new product launch in the history of electronics. If you think they are not going to do the same thing with the iPhone, then….aka I guarantee it will happen…

    2. It is happening, just takes time. AAPL has gone from 1 carrier in one country –> more than 250. Like in US, it takes a while for operators to realize the requisite to carry the iPhone through loss of the ‘most valuable’ customers. E.g. AT&T –> Verizon –> Sprint –> T-Mobile (6 years). The same is being repeated worldwide, but takes time, AAPL won’t negotiate better terms unless the iPhone craters, which I don’t think will happen…

    3. AAPLs special tooling of suppliers with AAPL specific manufacturing equipment? I really like this question, real mystery

    4. AAPL is moving to TSMC (Taiwan Semi) as quickly as possible, it is an incredibly big transition for semi mfg, the biggest of any component. This takes 3-5 years. It is in process, but will be a few more years to completely cut the tie with Sammy…TSMC is doing significant capex, as big as they ever have, I, personally, don’t think it is a coincidence…

    Horace, just started listening to your ‘Critical Path’ podcast, great stuff…highly recommend to others…Cheers

    • JaneDoe12

      If you’re interested, there is HTML code to display special characters: here

      For example, the code for a ¢ is: ¢
      For a →, it is: →

      • Brrriiiaaallliiiaaannnttt

        Very nice! Thanks…Didn’t even realize the comments were HTML!…thought they were plain text…been a while since I wrote HTML, but I think it is packed somewhere in the back recesses…Cheers…

      • JaneDoe12

        Disqus allows a few HTML tags, too. We can use bold, italic and underline, strikethrough and a few others. We can do tables with <pre>. But you have to edit to straighten-out the columns, and even with that they may not line-up exactly.
        aaaa bbbb cccc

        abcdefgh 1111 2222 3333
        ijklmnop 4444 5555 6666

        Here’s the Disqus doc.

      • Brrriiiaaallliiiaaannnttt

        The link didn’t come through, but was able to find lots of reference resources. Will play around with it, Thanks JD…Cheers…

  • neutrino23

    I would add a question about the management of the apps like iWork and Aperture. Why do they let these go so long without major updates? Apart from the benefit to Apple do they feel any responsibility to the customers to upgrade these in a timely fashion? Why not sin these apps out int a separate company like FileMaker Pro?

  • pbreit

    These strike me as very stupid questions.

    The questions that should be asked is why doesn’t Apple trade some margin for more customers. Apple states ad nauseum that it wants to put great products in peoples’ hands but it is totally negating this goal by requiring such a ridiculous margin.

    • http://fforward.co/ Jon

      You’re probably new to this site, but the commenting policy states “zero tolerance for lack of civility. Any disrespectful comments will be deleted. There are no warnings.”

      I’ve already taken the liberty of flagging your comment. Hopefully it will be removed in short order.

      As to your question, if you took the time to read carefully Horace’s questions, you would notice that the implied premise in question 2 encompasses the scope of your question. Trading margins for customers in the iPhone business means reducing the subsidy burden for carriers, which would allow Apple to expand its carrier network and sell more iPhones.

      • pbreit

        That’s a pretty lame action by you. I think the questions are stupid. The CEO of one of the world’s most valuable companies should not be asked such dumb questions. Questions #2 doesn’t even touch on my question. Apple claims to want to put great products in peoples’ hands but its margin policy prevents that.

      • http://twitter.com/JessiDarko Jessica Darko

        You make the mistake that so many android fans make- you just assert your conclusions without making an argument. It’s taken as an article of faith that Apple is “expensive”, but this hasn’t been true for decades, even in the Mac.

        Apple is not trying to make the $10 laptop for kids in india, because Apple doesn’t believe in making crap. You can’t get something for nothing, and everyone pays the same price for phones on contract.

        The pre-paid market is a different market, and Apple isn’t competing in it. But the economics are shifting, and I think that Apple will be able to make a non-crappy phone for that market soon.

      • nicmart

        Macs are more expensive because Apple targets models to more affluent users. The average price point for a PC sale is much lower than for a Mac sale. There is no evidence that Macs are much more reliable than PCs, despite the substantial price difference. For the 90 percent of users (that you think is important elsewhere in this thread), a sub-$500 computer does the job.

      • http://www.facebook.com/shawn.dehkhodaei Shawn Dehkhodaei

        I respectfully disagree …

        Macs are NOT more expensive than PC’s … The reason that “entry” price points on PC’s are much lower, is because they simply have less expensive and lower quality parts in them … starting with CPUs, GPUs and so on ….. That’s why the average price point is much lower.

        As a metaphor, the average sale price of a Honda is much less than a Mercedes, and they both take you from point A to B, but they’re not built the same way.

        On that note, it HAS been proven that the ride comfort, safety and performance of a Mercedes is far higher than a Honda Accord (I’ve owned both for many years), and hence why people are willing to pay more for a Mercedes (it’s not a fad either … Mercedes has been doing this for over a 100 years).

        In fact Macs are much more reliable than PC’s, both in terms of security, stability (OS, Applications), hardware, warranty, customer service, and finally resale value. I’m not sure where you’ve found “lack of evidence”. All you have to do is read JD Power, PC Magazines, Product Reviews …. this has been the ongoing theme for the past 15 years. I think their resurgence in the past 15 years speaks volumes on that.

        For the 90% of population, a reliable computer with average performance will do that job; however, most PC’s are NOT reliable (though they do have average “raw” performance).

      • nicmart

        As I said elsewhere, Macs are sometimes found to be more reliable than some PCs, and sometimes less so. In 2012, Computerworld found, “Macs stuck in 4th place on reliability, support ranking.”

        The data for the article came from Rescuecom, and the article reports that “Apple has placed third or fourth in Rescuecom’s rankings of U.S. computer makers since early 2011, when it held the second spot. Before that, Apple had captured first place three years running.”

        http://tinyurl.com/ppjp7o3

        The results depend on the source and the year. In some years Consumer Reports readers survey has found that Apple is not the most reliable.

        By no means is Apple’s superiority a slam-dunk, and the claim that Apple uses more reliable parts has often been made but never supported by any evidence that I’ve seen. Many breakdown reports note that Apple uses pretty much the same parts as other manufacturers.

      • macbrewer

        LOL, consumer reports? Seriously? The rag that said you needed duct tape to ‘fix’ an iPhone 4? There was and never has been a problem with it. At all. Consumer reports is an opinion piece. They do some testing, but it’s extremely limited. A user survey is much more powerful, if done correctly.

      • http://www.asymco.com Horace Dediu

        Macs have a monopoly on OS X which results in a price premium.

      • Kizedek

        Hmmm, no evidence, except, among other things, PCs require a lot of specialist support; while everyone I know with a Mac doesn’t spend an hour or a dollar on maintenance for the six years of their useful life.

        It is definitely documented how PCs at work or school or wherever require far more attention from IT personnel. The up front price point for a PC is much lower than a Mac, but study after study shows that TCO is far lower for Mac. For you to overlook that is completely disingenuous.

        The Mac is not targeted at the more affluent. It is targeted at anyone: who takes more than two minutes to do a little research, who doesn’t believe the first thing they hear from a salesman or pundit, who wants value for money, who isn’t swayed by numbers on spec lists alone, who values their time, who just wants to get on with their task and not worry about the computer getting in the way, who likes a good tool to do a good job, etc. etc.

      • macbrewer

        Actually there is tons of evidence for this. Look at user reliability surveys, just for one. I don’t buy your assertions, and none of your arguments make sense for someone who is actually buying the product. I think this is a ruse on your part, frankly.

      • KirkBurgess

        Actually there is plenty of data that says Macs are more reliable, and Corporate IT reports that indicate a far lower cost of ownership due in large part to a lack of malware/viruses present on Macs.

    • jameskatt

      Apple makes great products with great profit margins. That is its calling card. It doesn’t aim to get marketshare. If you cannot afford an Apple product simply get a better job or a second job and save up. Even poor people get Apple products.

      • http://twitter.com/JessiDarko Jessica Darko

        Who can’t afford a $0 iPhone? I think it’s kinda funny that people claim Apple’s iOS products are overpriced when the competition is at the same price or higher.

      • nicmart

        My you are a shameless fangirl. There is no zero dollar iPhone. The cost is built into expensive contracts. What is the cost of an iPhone with a service, like StraightTalk, that doesn’t subsidize the phone?

      • Slurpy2k12

        Instead of calling her a “shameless fangirl” you could have realized that the point she made was absolutely valid, which is that competing flagship Android devices are no cheaper. The S4 is $649+tax off contract. I’m pretty sure she knows what a subsidy is.

      • macbrewer

        You are a fandroid poser. I don’t buy your assertion that you have owned lots of Macs. All the fandroids say this now.

      • nicmart

        I thought the myth that Apple “doesn’t aim to get marketshare” died years ago. That was a talking point dreamed up when Apple was struggling to get market share and survive. Since then it has obviously set out to achieve dominant market share in every category where it has been able.

      • complexity

        If it has “obviously” been doing that, then it’s been doing an incompetent job of it. Likely they have more complex priorities.

      • Slurpy2k12

        “Obviously”? Really? You think Apple couldn’t spit out a dirt cheap phone if it wanted to? I’m sure they have the competence to do that. Maybe, just MAYBE, they look to set a balancing act between marketshare and margin, and in a way that doesn’t dilute their brand and the experience of using an Apple product? If Apple cared solely abou marketshare they wouldn’t have introduced the first iPhone at $599 on contract. They believe in a quality product, and sales come based on that.

      • nicmart

        Like its competitors, Apple’s phones are often cheap or free with contract, depending on model. As its share of the market for smartphones declines, it may well deliver a cheaper model to market, just as it has covered wide price points for music players without diluting the brand. It is increasingly allowing no-contract cell providers to sell its phones, which applies downward price pressure. (If Apple doesn’t care about market share, why has it paired so thoroughly with the greatest market share retailer in the world, Walmart?)

        Independent sources, such as Consumer Reports reader surveys, have found Apple’s product quality to vary like its competitors’ products do.

        I’ve owned nothing but Macs since 1984, but that is largely because of the OS, not because of a perceived advantage in quality. As more software is unhinged from a given platform, either through subscription (Adobe) or online availability (Google Apps), the OS distinction is less relevant. Also, I no more need a computer that is at the upper end of the market than I need a BMW. I’m happy driving a Honda. So, the odds are against my purchasing another Mac. Or maybe I’ll just have a used Mac mini for playing music. (Right now I own a current model 27-inch iMac.)

        Participants in this discussion have pitched tents at opposite ends of the Apple defense. On the one hand some claim that Apple caters to the more demanding elite at the expense of market share; while on the other hand some claim that my needs (e.g., the ability to play a local music collection without first turning on a Mac), are too unique for Apple to bother with, and that Apple products are no more expensive than those of competitors. (The latter is true like a Mercedes is no more expensive than a similarly equipped Lexus.) As usual in this sort of discussion, many see Apple as tabula rasa, and propose whatever suits their preconceptions, none of which are based on much evidence or any statements from Apple executives. And as usual, many people just HATE it when you disagree with them.

    • http://www.facebook.com/shawn.dehkhodaei Shawn Dehkhodaei

      The operative word in Apple’s statement is “great” …. and generally speaking, “great” is mutually-exlusive to “cheap” or “affordable”. You shouldn’t worry about their margins … you should worry about whether people are willing to buy them or not. Lululemon has much higher margins than Apple, and people still flock to them like crazy.

  • obarthelemy

    #1: There are 3-4 available iPhones already, starting at $0 in subsidized, core, rich markets. Does releasing non-luxury product for unsubsidized, non-core, poor markets and thus cheapening the brand make a lot of sense ? Plus, there is One Right Size for phones, we won’t cater to the “large” segment (who are certainly holding it wrong, to top it off).
    #2: see 1. We can only succeed in rich and subsidized markets, and those are well-covered already, no need to try and fail elsewhere.
    #3: We buy machines, though we let the slave handling to others. That way we keep our hands clean, our legal liabilities low, and can still go for the luxury/work of art crowd. As long as we can stamp “in California” somewhere on our gizmos, our customers are happy. Also, by buying the machines we own our supply chain.
    #4: Samsung was/is the best Fab that would deal with us. But we’re playing politics now, so 2nd or 3rd best will have to do from now on.

    • Slurpy2k12

      What a mind-numbingly stupid troll your post was.

      • coldtea

        You keep using this word “troll”. I don’t think it means what you think it means.

        Not to mention that using it makes you sound like a masturbating 16 year old on 4chan.

    • Flexxer

      As time goes on, you more and more show your true colours. Your short journey from advocatus diaboli to full-on Android shill/troll has been completed with this post. I hope this will lead to your comments in the future being ignored as they deserve to be.

  • http://twitter.com/mozfart willo

    Great questions, and I hope ATD asks them. I´d also like to hear Tim Cook thoughts on the current dismal situation in the PC market and how Apple approach it.

  • Slurpy2k12

    Meh. This would be alot more interesting if this was held after WWDC, so at least Cook can comment and take questions about what was shown there. As it stand how there’s very little that Cook will say, and very little he’d be able to talk about. He’ll deflect pretty much everything.

  • François Prigent

    I frankly wonder why you don’t work in marketing, Asymco :)

  • HoX

    HARDWARE

    Why Apple does not make a mini tower Mac?

    Why Apple does not make a pocketable Mac (the ultimate tool for Keynote and PowerPoint presentations)?

    Why Apple does not make a 24-inch iMac (21.5 and 27 are too small and large, respectively)

    Why Apple does not make a 24-inch Thunderbolt Display (21.5 and 27 are too small and large, respectively)?

    Why Apple does not offer the option of true matte displays at least for the standalone displays and iMacs?

    Why Apple does not make a true Full Picture-in-Picture Thunderbolt Display and iMac (two Digital Terrestrial Television tuners inside)?

    Why Apple does not fully support 3D playback on Mac and Thunderbolt Display as PC Windows with nVidia and others do?

    Why Apple does not make a keyboard with numeric keypad with built-in USB 3?

    Why Apple does not bring back the useful power-on key on keyboards previously available for ADB & USB 1?

    SOFTWARE

    Why Apple does not stop releasing new Mac OS X versions until previous flaws and bugs are fixed?

    Why Apple does not bring the useful search options of Mac OS 9 (Sherlock) into 10.8 or later?

    Why Apple does not bring the useful up-and-down-window-arrows of Mac OS X 10.6 into 10.8 or later?

    Why Apple does not implement the useful feature to prevent disk mounting at startup to save energy, wear and disk life (MTBF) on selected volumes and disk drives?

    Why Apple does not remove the bogus-spurious Disk Utility permission repair-permission-error messages?

    Why Apple does not allow to use folders on the Application side of the Dock with folders and lists with other applications inside to boost productivity?

    Why Apple does not bring the wonderful editing features of QuickTime Player 7.7 into QuickTime Player 10 or later?

    Why Apple does not bring the wonderful editing features of iMovie 4 and iMovie 6 into iMovie 9 or later?

    Why Apple does not implement the absolutely useful resume playback feature available on SoundJam MP (from where iTunes evolved 13 years ago)?

    Why Apple does not support electronic signatures via certificates as Internet Explorer (Windows) does?

    Why Apple does not bring back Rosetta at least as on option?

    Why Apple does not make a powerful and flexible, yet easy to use e-Mail client like Eudora Mail (Qualcomm) was?

    Why Apple does not make a powerful and flexible, yet easy to use PDA – PIM – CRM like Claris Organizer and Palm Desktop (Palm) were?

    Why Apple does not make a powerful and flexible, yet easy to use drawing application like Canvas (Deneba – ACDSee) was?

    Why Apple does not make a powerful and flexible, yet easy to use 3D playback software like Stereoscopic player at http://www.3dtv.at/Index_en.aspx is?

    Why Apple does not implement a working VPN feature like Thunderbolt?

    Why Apple does not implement fast download engine in Safari like iGetter (Presenta Software)?

    Last but not least, why Apple does not implement the arithmetic average symbol (x with – on top) in fonts?

    That is!

    • satire

      I can’t tell if this is satirical or not.

    • coldtea

      “””Why Apple does not make a pocketable Mac (the ultimate tool for Keynote

      and PowerPoint presentations)?”””

      Because they make laptops. Including the Air. A pocketable Mac? What BS would that be?

      “””Why Apple does not offer the option of true matte displays at least for the standalone displays and iMacs?”””

      Because they have inferior color quality, purposefully diffuse the image, and are only of use for fussy people that don’t have any control over their office’s lighting and their monitor’s placement.

      “””Why Apple does not fully support 3D playback on Mac and Thunderbolt Display as PC Windows with nVidia and others do?”””

      Because it’s a BS gimmick that’s already going away.

      “””Why Apple does not bring back the useful power-on key on keyboards previously available for ADB & USB 1?”””

      Because you’re not supposed to power on/off your iMac/Mini, you’re supposed to sleep and wake it.

      “””Why Apple does not stop releasing new Mac OS X versions until previous flaws and bugs are fixed?”””

      Because bugs and flaws are never fixed in total. And they have to keep working on new stuff too, because people become angry (“where’s the new version?”) and new technologies always emerge (“hey, why don’t they support Y”).

      The rest is a mix of “I like to live in the past”, “I want Apple to make everything, even though there are tons of third party apps for that”, “I want some bizarro marginal feature” (“arithmetic average symbol”? Really?).

    • jameskatt

      1. MINI TOWER MAC: Perhaps this is in the works. Apple doesn’t disclose future products.

      2. POCKETABLE MAC: Apple already has this. It is called the iPhone and iPad Mini. If you want an Intel CPU then you have to wait for Intel to make a good enough CPU to put in a phone.

      3. 24-INCH iMAC: It certainly would be nice.

      4. 24-INCH THUNDERBOLT DISPLAY: If you are going to spend that much for a Thunderbolt Display, then the 27-INCH is the way to go. Apple wants to keep the product line simple. You can get a smaller display from other vendors such as DELL, though without Thunderbolt – which isn’t totally necessary on a display.

      5. MATTE DISPLAYS: Glossy Displays are SEXY and LOVED by consumers. Glossy Displays are more vivid, sharp, and 3-dimensional. Matte displays simply don’t sell as well.

      6. FULL PICTURE-IN-PICTURE THUNDERBOLT DISPLAY AND IMAC (TWO DIGITAL TERRESTRIAL TELEVISION TUNERS INSIDE): Apple makes products that target 80% of consumers. More esoteric features are left out.

      7. 3D PLAYBACK ON MAC AND THUNDERBOLT DISPLAY: 3D TV is DEAD. Consumers don’t like it and voted with their wallets.

      8. KEYBOARD WITH NUMERIC KEYPAD WITH BUILT-IN USB 3: Apple skates to where the puck will be. Apple went for wireless keyboards without numeric keypads (which most people do not use). USB 3 is not necessary on a keyboard.

      9. POWER-ON KEY ON KEYBOARDS PREVIOUSLY AVAILABLE FOR ADB & USB 1: Apple has moved on to wireless keyboards.

      10. STOP RELEASING NEW MAC OS X VERSIONS UNTIL PREVIOUS FLAWS AND BUGS ARE FIXED: No operating system is free of flaws and bugs. New versions try to fix flaws and bugs. But new versions of any software also introduct new flaws and bugs. Why don’t you ask the same of Microsoft Windows?

      11. BRING THE USEFUL SEARCH OPTIONS OF MAC OS 9 (SHERLOCK) INTO 10.8 OR LATER: Maybe it will. But you never know since Apple won’t discuss future products.

      12. BRING THE USEFUL UP-AND-DOWN-WINDOW-ARROWS OF MAC OS X 10.6 INTO 10.8 OR LATER: Yes, useful. But it was an aesthetic decision to remove them so that Mac OS X would look more like iOS.

      13. IMPLEMENT THE USEFUL FEATURE TO PREVENT DISK MOUNTING AT STARTUP TO SAVE ENERGY, WEAR AND DISK LIFE (MTBF) ON SELECTED VOLUMES AND DISK DRIVES: It can already be done by getting drives which have an On-Off Button.

      14. REMOVE THE BOGUS-SPURIOUS DISK UTILITY PERMISSION REPAIR-PERMISSION-ERROR MESSAGES: Fill a bug report.

      15. ALLOW TO USE FOLDERS ON THE APPLICATION SIDE OF THE DOCK WITH FOLDERS AND LISTS WITH OTHER APPLICATIONS INSIDE TO BOOST PRODUCTIVITY: This would confuse consumers. The right side is for folders.

      16. BRING THE WONDERFUL EDITING FEATURES OF QUICKTIME PLAYER 7.7 INTO QUICKTIME PLAYER 10 OR LATER: It is called iMovie.

      17. BRING THE WONDERFUL EDITING FEATURES OF IMOVIE 4 AND IMOVIE 6 INTO IMOVIE 9 OR LATER: It’s called Final Cut Pro X.

      18. IMPLEMENT THE ABSOLUTELY USEFUL RESUME PLAYBACK FEATURE AVAILABLE ON SOUNDJAM MP (FROM WHERE ITUNES EVOLVED 13 YEARS AGO): Resume playback can be done for individual songs. Set it in the Get Info settings for the song. This is done for example for audiobooks.

      19. SUPPORT ELECTRONIC SIGNATURES VIA CERTIFICATES: They’re looking into it.

      20. BRING BACK ROSETTA: Apple has MOVED ON. Keep your old Mac to run Rosetta. Or try installing an older version of Mac OS X Server in Parallels or VirtualBox

      21. POWERFUL AND FLEXIBLE, YET EASY TO USE E-MAIL CLIENT LIKE EUDORA MAIL (QUALCOMM) WAS: Apple targets 80% of the consumers. Whatever features are left out can be taken up by 3rd parties. Mail is good enough for nearly everyone.

      22. POWERFUL AND FLEXIBLE, YET EASY TO USE PDA – PIM – CRM LIKE CLARIS ORGANIZER AND PALM DESKTOP (PALM) WERE: This is the job for 3rd parties. Market Circle makes a great PDA-PIM-CRM, for example. If you complain about the cost, then don’t ask this question. These apps are complicated. Claris Organizer and Palm Desktop were dogs.

      23. POWERFUL AND FLEXIBLE, YET EASY TO USE DRAWING APPLICATION LIKE CANVAS (DENEBA – ACDSEE) WAS: Maybe it will, maybe it won’t. Apple has to leave some things for 3rd parties to do. Adobe does a fine job with their products. Canvas still exists. But its developer decided to not make a version for the Mac since they did not make enough of a profit for all the labor. Canvas can still run in Windows on a Mac. Macs can run nearly every operating system.

      24. MAKE A POWERFUL AND FLEXIBLE, YET EASY TO USE 3D PLAYBACK SOFTWARE LIKE STEREOSCOPIC PLAYER AT http://WWW.3DTV.AT/INDEX_EN.AS… IS: Esoteric apps are for 3rd parties.

      25. IMPLEMENT A WORKING VPN FEATURE LIKE THUNDERBOLT: VPN can already be done on Mac OS X or via 3rd parties (e.g. Viscosity).

      26. IMPLEMENT FAST DOWNLOAD ENGINE IN SAFARI LIKE IGETTER (PRESENTA SOFTWARE): This is for 3rd party utililities like iGetter which work with Safari.

      27. WHY APPLE DOES NOT IMPLEMENT THE ARITHMETIC AVERAGE SYMBOL (X WITH – ON TOP) IN FONTS: This is the job of the font foundries, not Apple. It looks like they left it out for some reason. Ask this question to Adobe, Monotype, ITC, Microsoft, Google, and other font makers. You may also want to ask the Unicode Consortium why they left this symbol out of the Unicode standard. They already implemented an X with a vertical bar to the left, right, both left and right, and bottom – but not top. You could also create your own font and place the desired symbol in it.

    • Walt French

      Surely, your request for x-bar WAS meant to be the least.

      Is the symbol in any standard character set? I didn’t see it in a scan thru the unicode table so think that if you need mathematical typography you’ll need to write your Mathematica output into a PDF or whatever.

    • DesDizzy

      Hi HoX
      Apple do make a 24″ iMac and I am writing this on it! Unfortunately they only seem to sell it in Europe. I bought mine while I was working in Amsterdam. i agree it is a better size than 21″ or 27″

  • Loris

    The dilemma is always the same: a minor margin means more customers, which, in turn, may mean, hopefully, the same ore more profit. Why would you do that, bearing in mind that you inflate the value of the trade mark and you may have more complex mass production issues? Only if you believe that having a greater market share allows to compensate the disadvantages with some other key advantages (apps developers, market entry into lower income countries, others). Especially the new market entry issue is very important because you risk to be cut off completely out of that market; those markets are growing (to middle, high class income) and eventually will become very interesting also for high margin products, but it could then be to late to build a market precence.
    No easy answer. I’d like to hear T. Cook elaborate on these classical strategy issues.
    (In a completely different business model Amazon has produced for years a loss, only to be able to enter markets).

  • berult

    “…In other words, please explain why the iPhone is anomalous from a product portfolio point of view.”

    iPhone beguiles…as an Apple anomaly.

    A twinkling North-star hanging above the millennium market square, it sprinkles stardust over the continuum of Apple’s progeny, …seeds, on the wayside, ‘flair-crafted’ emulation, onto’ground-hogging’ complacency. berult.

  • nicmart

    Why is Apple satisfied with a tiny fraction of the movie streaming market? If it can’t figure out how to compete with Netflix and Amazon, why not exit the market?

    Why has Apple not more aggressively capitalized on its towering domination of music? Why do I still need to turn on my computer to access my music collection? Why no Apple home or car audio systems that can access and utilize an iTunes collection? (And no, the “cloud” doesn’t being to cover my needs in terms of quality or quantity.)

    • http://twitter.com/JessiDarko Jessica Darko

      Allow me to try and answer your perfectly reasonable questions:
      1. Apple is a platform provider. iTunes is a means to an end, not the end, and really a platform for content providers to deliver their content. This is why Netflix is welcome on the AppleTV. I think the movie streaming in iTunes is much like the Hub Apps that supported the mac in the past.
      2. Doesn’t iTunes match answer this issue? I think the home audio system is the AppleTV (which should have match soon ,if it doesn’t already) and the iPhone for the car. Match may not cover your needs, but Apple designs for the %90 market,
      3. I think Apple wants all content on AppleTV that it can get. In the past it’s been focused on delivering that thru iTunes, and I think it will make a deal with any content provider whose willing to agree to reasonable terms.

      I think the future for AppleTV is as a more open platform with content apps. We’re seeing that with select customers right now, and the hackers have found the APIs on the AppleTV and from the looks of them, they are almost ready for prime time.

      Personally, I think prime time might come this year!

      • nicmart

        1. I find your point obscure, but if you mean that Apple views itself as a conveyor rather than a major seller, the music business surely contradicts that. What leads you to believe that Apple wants less of the movie market than it has of the music market?

        2. Of course Match isn’t the answer. It has a puny limit, unreliable matching, and lossy content. In fact, the first gen Apple TV was a better solution (for music) than its successors. Why ignore Airplay, which allows (forces) the user to turn on his Mac to stream non-lossy music content to Apple TV? This is primitive; like having to turn on a Mac to use the phone. And since consumers are (partly thanks to Apple) moving away from computers, it makes even less sense. Given that iPads are not designed for ripping CDs and delivering them to Match, the better evidence is that Apple wants users to be captives of iTunes downloads.

        First you claim that Apple TV meets most 90 percent of consumers’ needs, then you say that the APIs will make Apple TV “more open,” and therefore, presumably, more popular. That is a contradiction. You offer not a hint of evidence, but merely optimistic speculation. There is nothing to support your belief that “Apple wants all content on Apple TV that it can get.” Its competitors have vastly more content, which Apple precludes even Amazon, the BBC World Service, and even the sort of weather app that is on every smartphone. The escape hatch to your fantasy is “reasonable terms.” And when has Apple ever pursued “a more open platform”? As I just pointed out, iPads are much less conducive to user control and maintenance of a music collection than are Macs and PCs.

        Speaking of a more open platform, Google (which does have more open platforms by design) is supposedly working on a competitor to Airplay, and I welcome it. If it works there will be, for the first time since I started using Macs in 1984, no particular reason to own a Mac. And someone is bound to eventually offer the ability to move a large music collection to the “cloud” without the problem of matching.

      • Relentlessfocus

        Regarding your last statement I refer to my post directly above. Although iPlayer is not on AppleTV yet, it is available via iPhone or iPod Touch or iPad and streams to AppleTV quite nicely. We don’t know if Apple has turned down the BBC for an iPlayer app on AppleTV or if the Beeb is not interested at the moment as they offer solutions listed above and perhaps see the AppleTV stand alone app as too limited a market given the current state of their offerings, their restricted budget and the technical challenges.

        I suggest to you that managing a lossless library is conceptually not a difficulty on an iPad but that the cost of solid state memory for a 300 gig lossless library like mine would put the cost of the iPad in a higher price range than most people would be willing to pay and for Apple that means it’s not worth doing, yet. I haven’t seen an Android player that does this either except maybe the iBasso D1000 which has been criticised for its glacially slow operation.

        For the same reason (cost, memory, speed) I think the iPad is not up to ripping. Yet. But it will come (IMO) as the processiing and memory technology becomes cheaper and the prospective market/demand grows.

      • obarthelemy

        google comes up empty for “ibasso d1000″. If I understand right though, you’re looking for a gizmo to play a large collection of lossless music.
        There is one (one !) old Archos Android tablet that has an integrated HD (which can be upgraded too, with a lot of fiddling). Gen 8 I think. Not sure if it has HDMI out, and I’d be wary about the analog output, this being the new Archos.
        Other than that, on the Android side, you could get an external HD. That shoots your mobility though, so you might as well setup an Android Stick or Mini-PC (some have SATA or e-SATA), connect that to your hifi via HDMI on one side, and setup dlna over wifi or ethernet. You can remote into that so a headless setup is OK after initial config.
        At home, I’ve gone with an old style PC server to host my media, it’s barely more expensive than a NAS and offers a lot more flexibility at the cost of a bit more complexity. It shares via SMB, dlna, and Plex (slightly redundant) and VPN.
        On the road, I’ve been looking at battery-powered wifi hard disks, but battery life is ridiculous. When I’m going away for a while, I lug a $200 netbook with an upgraded 1TB internal HD, or if I want smaller, an external 1TB USB HD that I connect to an old phone recycled as a dlna server. That last setup requires mains power though, adding an external battery pack would make it more cumbersome than the netbook.

      • Relentlessfocus

        Sorry, the product I was thinking of is the iBasso DX100 which runs Android 2.something. I originally thought the dude wanted something portable when he went down the road of comparing to Amazon streaming service.
        There are any number of hi end hifi products designed to act as music streamers for example: http://www.naimaudio.com/hifi-products/type/network-player or http://www.cyrusaudio.com/product/streaming-music-players/stream-xp-qx and they generally cost in the neighbourhood $2-5K because people who want such devices are careful about bit-timing/Jitter and other arcane measurements, and of course internally they are computers and hard drives so the idea of not turning on the computer is illusory. In general they don’t use AirPlay because the market for streamers is so small (relative to Apple products) so they use UPnP or DNLA which are more widely supported. As you say, a Mac mini is a frequent choice for audiophiles.

      • nicmart

        Yes, I think of all the options, the mini is most practical and best value. Probably a used one would do the job for $300.

      • Brian_M_CDN

        The Mac mini is also lower power usage than most dedicated units as well (on average not much more than the iPad with its screen on) Idle power consumption of about 7-8 watts, average under typical usage around 10 watts (if you aren’t using flash), peak of about 30 watts.
        Much more versatile than the AppleTV although even used is more expensive, but the amount of options is worth it.

      • nicmart

        BBC world service is available on almost every platform I can think of except Apple TV, including the iPhone. Neither of your excuses is plausible. Other BBC stations are available the ATV Radio, but not the world service. Roku offers BBC audio and video services. Apple just does a lousy job of populating ATV with content.

      • macbrewer

        So, who is forcing you to use it?

      • http://twitter.com/JessiDarko Jessica Darko

        1. I suggest you look into what platforms are as a business strategy.

        2. Your demands for streaming music are absurd. iTunes Match is not for you, but Apple shouldn’t build something to meet non-mainstream demands.

        AppleTV meeting the %90 needs does not contradict a SDK allowing Apps to be built to meet other needs. In fact, a SDK allows app developers to address that other %10 of the market.

        You don’t get to criticize me for not offering evidence, and in such a snotty way, when you haven’t provided any evidence to support your claims. Further, I have provided logic and reason and buttressed it with facts, which would be plenty if you were interested in having a discussion, but you are not.

        When has Apple ever pursued “a more open platform”? ARE you kidding me? This kind of assertion makes me wonder if you are not just here to bash Apple.

        Since you seem unaware of it, prior to the iPhone, you could only install limited apps on phones, even so-called “smart” phones. Apple created the AppStore and opened up their phone to anyone who wished to make apps for it, taking this out of the carriers control, and resulting in a far more open experience. Further, in 2007, before the AppStore existed, Apple set up the ability to make web based apps for the phones, and they maintain that to this day.

        This means that those who claim that iOS is a “walled garden” and you can only get apps thru the appstore are telling a falsehood. “Google (which does have more open platforms by design” — Android is less open than iOS. Without Jailbreaking, you can only install google approved Apps on android. Apple allows you to install apps completely outside the appstore. So, please stope the “google is more open” BS.

        ” for the first time since I started using Macs in 1984, no particular reason for me to own a Mac”

        Why is it Apple bashers always pretend like they’re Apple’s most ardent fans? When I see claims like this, it immediately makes me believe you’ve never owned a mac.

        If you *had* been using Macs since 1984, you’d know how Apple works, and you’d not be completely unaware of the relevant history here.

        “And someone is bound to eventually offer the ability to move a large music collection to the “cloud” without the problem of matching.”

        This is trivial right now if you’re technically competent enough.

        But you’re putting out unreasonable demands and claiming that Apple is going down because they aren’t meeting your demands. …. which is kinda funny since if you really wanted this you could do it now (assuming sufficient technical competence, but it’s not much.)

        I answered your questions in a reasonable manner. Your response was snotty and hostile and didn’t bother to address the points I was making.

        This makes me believe you’re just here looking for a fight.

      • nicmart

        While I’ve owned many Macs, I’ve never been a fanboy. Nor do I make any effort to aggrandize fanboys, whose link to reality is tenuous at best.

      • macbrewer

        LOL, riiiiight. And you think you can hear the difference between lossless and 256kbs. Or you THINK you can. However, it turns out that about 90% of the (perfectly normal, non fanboys… ;-) who think this can’t pass a test to prove it.

    • randalleclayton

      iTunes Match does resolve the issue of having your computer on to access music on Apple TV. However, you have to pay extra for iTunes Match, it is not free.

      • nicmart

        Match provides for a small collection of lossy music. That doesn’t meet my needs. Amazon offers 10 times the number of songs for its matching service (250,000 v 25,000) at the same price, but it is also lossy and, in my experience does unreliable matching. Amazon is supposedly going to offer unlimited free matching (if it doesn’t already), but with the same quality and reliability limits, no doubt. I wait for the service which which allow me to stream my 1TB lossless music collection, since I want to quality compromise. Much easier though would be a cheap box that would let me play my iTunes through my audio system without need of a Mac.

        As I pointed out in another pose, Apple designed the iPad without the facility adding CD rips to Match, so it clearly wants users to do business only with the iTunes store.

      • Relentlessfocus

        Fwiw Apple is reportedly engaged in negotiating with the music companies for high quality streaming though I have yet to see the definition of high quality. Spotify offers 320kbits/s streaming but if you use that setting on 3G or worse 4G you eat through your data plan like a knife through proverbial butter. Were you to choose Lossless it would be even worse and further, I’m not sure your data connection could even stream smoothly at that data rate. When I download a Mahler symphony 45 mins of music in uncompressed lossless mastered at 24bit 96khz it takes about 30 mins at 10mbits/sec.

        When you consider the dirth of high quality recordings for popular music, the relatively small cohort of people who know about lossless music and have the equipment to benefit from it then the calculus strikes me as not warranting the costs in bandwidth and server space to Apple for the relatively small customer base wanting the service you outline. I imagine the same is true for Amazon, Google et. al.

      • nicmart

        Your comment has no relevance to my stated desire to stream my iTunes collection locally without turning on my computer.

      • Relentlessfocus

        Apologies, I thought I had seen something about cloud in there.

      • Relentlessfocus

        And just to note I did respond to why iPads or iOS devices aren’t your lossless local streaming music centre.

      • juancho

        Match DOES that, it uploads all your songs in your computer to the itunes cloud and allow you to access all of them via any iOS device.

      • http://twitter.com/JessiDarko Jessica Darko

        You’re less than %1 of the market. There are a variety of NAS machines out there with linux built in that doe iTunes streaming… probably can connect one to the AppleTV.

        But your demands are so out of the realm of the mainstream (namely lossless and 1TB) that it doesn’t make sense for Apple to chase customers like you.

        Trying to satisfy everybody is how you end up with a portfolio of 142 different smartphones (samsung) and no good ones.

        Amazon is a company that will promise you the moon, but does not deliver.

      • Walt French

        And I, in turn, think you are a bit confused.

        This post was about the direction of a company that (currently) sells a small number of products to hundreds of millions of people. This site emphasizes the challenges of 21st century excellence in an industry dominated by technological disruption, not the wishes of a few thousand audiophiles around the globe.

        Apple already sells equipment that does what you want (via connection to your current audio gear), but isn’t packaging it into a single-function mobile device. Of course, “mobile” means high ambient noise, and low-powered audio driving something 3 notches down from reference speakers. As far as I can tell, you are saying you want a wireless version of the Google Q, a disastrously badly-thought-out, $300(?) product that Google never should have proposed, and one more ridiculously limited by mobile connectivity standards.

        The chance that Apple will produce such a product, even without the convenient bad example of Google, was always zero. The idea that somebody like Mossberger would ask Cook is no more likely.

        One of our kids’ favorite stories was about a simple farmer who, when granted 3 wishes, squandered them first on a nice sausage, then for it to stick to his complaining wife’s nose, and the third to remove it, leaving him with nothing. I think you are likewise asking for something that you would never actually buy, and that, if you DID somehow acquire, would not have you any happier about understanding what type of business Apple is actually running.

        So I don’t think you’ve understood what Asymco is all about, nor what you were asking for.

  • http://twitter.com/JessiDarko Jessica Darko

    I just wanted to take a moment to thank Horace for several things:
    1. Thanks for not being a douche. Seriously. So many in the Apple ecosystem of blogs are elitist, entitled douches with closed minds.
    2. Thanks for having comments, a clear example of point #1.
    3. I don’t think Tim would ever answer your questions, but thanks for asking them. You illustrate some key … fault lines… in Apple’s business. You do this without a link-bait headline or presuming incompetence on Apple’s part, as so many “journalists” do these days, while at the same time not being a rampant fanboy who wouldn’t think deeply enough to recognize these issues.

    Let’s hope against hope that we get answers to these questions soon, though I think we will in the form of actions rather than words.

    • neutrino23

      I think Tim would reply, but maybe not with the level of detail wr’d like. At the last analyst call-in someone asked about a larger iPhone. Tim said

      “Our competitors have made trade-offs to ship a larger display. We will not ship a larger display iPhone while these trade-offs exist.”

  • Slurpy2k12

    This might just be the most intelligent, and troll-free Apple comment thread I’ve read in my entire life. And I’ve read tens of thousands of them, on every single major website, which tend to have a baseline of at least 20% troll posts (and way higher). This one is.. near zero. My mind is completely blown, and my faith in humanity restored by a very small degree. Where has this site been all my life?

    • soulseek

      Horace doesn’t cater to your average reader, hence the lack of trolling. You should always read the comments, some great insight. He even links to a few great ones on twitter (like yours in this case).

      • Slurpy2k12

        Hah, thanks for the heads-up :)

      • oases

        Last year, I considered making a Glassboard—or something similar—for Asymco discussion, so commenters/fans could have tangential or off-topic discussions without waiting for Horace to get to a particular subject. And we could have had silly little debates about skeuomorphism and device screen sizes and whatnot. But I decided against it. Wasn’t sure if it would be very good, whether there’d be demand, and of course, Glassboard is private, which goes against this site’s ethos.

    • LTMP

      I’ve been reading Asymco pretty much since its inception.

      At first it was for Horace’s insights, but these days I get at least as much from the comments.

      That is high praise when you consider the fact that Horace’s writing and content has steadily improved.

    • ADVILL

      Welcome, you are always on time…

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  • obarthelemy

    1- The iPhone is sold at 3 price points, starting at $0 for subsidized countries, which are the core, rich market. Adding cheaper models for non-core, poorer markets will not lower the price in core subsidized markets, and will cheapen the brand.
    2- see 1-. Countries able to afford luxury phones are well covered already.
    3- We buy machines, which allows us to lock out competition, but don’t handle “labour”, to avoid liabilities and pawn off scandals. “Designed in California” is enough to sound trendy.
    4- Samsung was the best fab that would deal with us. We’re moving to 3rd or 4th best now for political reasons, and that will have to do from now on. Stil “designed in California”, so we’re OK.

    • worthit

      Was it really worth reposting this after the first time it was deleted or you deleted it? Kind of a facile analysis that ignores the interesting parts of the questions.

      • obarthelemy

        I’m trying to determine if the host is allergic to the gist of the post, or just to the frankness of the world “slave”.

      • Slurpy2k12

        Frankness? He’s probably allergic to extreme stupidity, and trollishness. “Slaves”? Ignoring the fact that the term is used solely to denigrate, and is by no means accurate, you clearly couldn’t care less that everything else you buy, from every other company, is also produced under “slavery”- but suddenly have an issue with it when it comes to Apple? Who have been more transparent, and have done more to improve the situation than any of their peers? The worst kind of people are those like you, who pretend to be care about an issue only to serve a childish agenda of hate. I’m sure your “Huawei Ascend Mate” that you’re so proud of was produced by unicorns and rainbows.

      • obarthelemy

        not voluntarily, students were told they would be making iPhones for the 5’s launch. no choice.
        indeed, paid. then charged for awful accomodations (have you seen the very few photos of those ?)

        indeed, all other companies are the same. only Apple have the gall to tack on “designed in california” to their products (could they be more poseur ?), describe their producs as magical work of arts, even on this blog, you get … poems… about the devices… the workers’ conditions bear repeating, in those crazy circumstances.

        apple could set labour guidelines, same as the “finish” guidelines they have for their products. they choose not to, and do the minimum required to be able to pass the buck. others are no better mind you, but they’re not pretending to be works of art, nor to inspire poets.

      • Slurpy2k12

        Actually, Apple do set labor guidelines, and if you honestly cared about the issue you would have done the 5 seconds o f research required to know that.

        http://www.apple.com/ca/supplierresponsibility/

        Oh, and something tells me you haven’t even bothered reading this report in order to educate yourself:

        http://images.apple.com/ca/supplierresponsibility/pdf/Apple_SR_2013_Progress_Report.pdf

        There’s alot of stats and detail there. “they choose not to, and do the minimum required to be able to pass the buck.”

        That’s pretty much a lie. But par for the course for you.

        The fact that you take so much issue with “designed in california” is also hilarious. How irrelevant. I also haven’t come across a single poem about the iPhone, but it’s quite telling how you view Apple as being responsible for any expression that anyone has towards their products. “Works of art”? Have you missed the last view product videos from Samsung, Google, Microsoft, HTC, etc where they describe in painstaking detail how they were inspired to create the product (Nexus 4, Pixel, GS4, Surface, HTC One) and the materials used? Of course- because, as always, you don’t give a shit about making an objective point, but attack selectively whatever suits your insanely biased agenda.

      • obarthelemy
      • Fairhead

        In this very post a troll

      • http://twitter.com/leicaman leicaman

        Wow, talk about the opposite of the truth. Not even Samsung paid astroturfers a would say such obviously false things about Apple’s labor practices.

        Apple certainly has its issues in this area. And while they still have a lot to do, and they must remain vigilant, there is no tech company contracting in China who is doing it better, let alone matching them for their diligence of trying to do the right thing. The others just try to stay out of the firing line of the opportunistic NGOs who see Apple’s name recognition too tempting to not abuse.

      • obarthelemy

        So “others do it too” is a valid justification. Let’s ponder the implications of that…

      • Slurpy2k12

        What a way to twist his words in order to be intellectually dishonest. Well done. You’ve proven to be a blatant liar several times now, constantly redefining your argument whenever it is proven invalid. We’ve established that you hate Apple, but the way you’re forced to twist reality and mold facts using such irrationality, in order to fit that premise, is pitiful.

      • http://www.jphotog.com Hrunga Zmuda

        Not at all. But dishonest lies about Apple, such as these you apparently believe are true, don’t help make things better. All they do is muddy the water.

      • Fairhead

        And

      • dteleki

        When I found that “Designed In California, Assembled in [Wherever]” line on the box of my new HP laptop, my first thought was: gosh, how the mighty have fallen, to want to imitate THAT. A cheap laptop several years back, yet so astonishingly handsome — in a way that owed NOTHING whatsoever to Apple styling — that it gave me ridiculous amounts of pleasure just from LOOKING at it every day. Now, even THAT much proud distinctiveness from Apple has fallen by the wayside.

      • obarthelemy

        I find that kind of “branding” snobbish, and borderline racist. Speaking as an ex-Parisian, are Parisian designers or chefs supposed to be innately better then Delhi/Bangkok/Cairo ones ? Plus the kind of customers with which that argument has any kind of pull must have a certain value system…

      • innate

        Are the assemblers in China supposed to be innately better than elsewhere?

      • obarthelemy

        légal requirement ?

      • Fairhead

        No, legal requirement

      • Fairhead

        How did you “find that kind of “branding” snobbish,”, how long did it take you to find it

      • http://twitter.com/JessiDarko Jessica Darko

        Now you’re just lying. Apple’s conscripting students? Accomadations are “awful”? Well, on that one, sure they aren’t the cadillac accomdations you would demand that we pay for you to live in…. but compared to “back home” for most of these chinese employees, they are great.

        “Designed in California” sounds like “Designed in Detroit” to me. California used to be the goldenstate, now it’s a socialist hellhole rapidly circling the drain, like all socialist states become.

        You lie when you claim Apple doesnt’ set labor guideines.

        Bottom line is, you want to dictate that Apple does things the way you wish– an impractical way that doesn’t work– and since they don’t, you’re going to tell lies about them.

        This tells us more about you than apple.

      • obarthelemy

        1- http://www.nytimes.com/2012/09/11/technology/foxconn-said-to-use-forced-student-labor-to-make-iphones.html?pagewanted=all&_r=0

        2- Where did I say Apple doesn’t set labour guidelines ?

        3- I merely said they subcontract manpower (but not machines so much) for a reason, and they could have working conditions as pristine as the back of a (new) iPhone 5 if they wanted to.

        The same way you can’t take into account one tangible feature of a product and discount all others, you can’t look at one intangible value / process and discount all others. If the design philosophy and aesthetics of a phone count, then so do the labor philosophy and working conditions.

        To me, craftsmanship *is* part of the experience, for non-purely utilitarian stuff.

      • Fairhead

        2- Where did I say Apple doesn’t set labour guidelines
        In point 2 “Apple doesn’t set labour guidelines”

      • Kizedek

        You are obviously very emotional about the “poseur” element. But the term “design” is applicable. Basically, Apple products are just about the only products that are rigorously designed in any meaningful use of the term; and from scratch. Most other products have a lot of elements that are off-the-shelf, and it basically amounts to picking from the smorgasbord of options that the assembler provides ;)

      • Fairhead

        not voluntarily = no choice?

      • http://twitter.com/JessiDarko Jessica Darko

        It’s kinda funny how people like you characterize workers grateful for these high paying jobs as slaves. The workers don’t like you– they are mad that your kind forced them to work less overtime.

        Yet your kind are happy to force others, using violence, to live according to your socialist dictates.

        Freedom is slavery and slavery is freedom, eh?

        How orwellian.

      • Fairhead

        What is the gist of the post ?

    • Kizedek

      1) seems like there would be a lower price under subsidy: Instead of entering a contract of 36 Euro per month for two years, I am sure many would rather enter one at 24 for one year. A new Apple product would not necessarily “cheapen” the brand any more than multiple iPods have. Still good quality, just marked difference in hardware features or form factor.

      3-4) You have them reversed. Where the supplier doesn’t necessarily have top of the range equipment for every aspect of production, Apple invests in it — precisely because they do not “make do” with off-the-shelf parts. Whomever the supplier, Apple still has quality requirements (and I don’t know that Samsung is hands down highest quality supplier around since they are practically the Korean mafia); and Apple is known to get involved in labor conditions far more than most other client companies in the world.

      • obarthelemy

        Do contract prices still depend on the phone in certain countries ? Where I am, that was the case a few years ago, but nowadays, only the initial phone price differs, monthly payments are the same whatever the phone.

        You’re confusing parts and technology. Apple have chosen to make do with off-the-shelf technology (Intel in particular have better fabs). Even with that, setting up production is bound to have issues.

        As for labour conditions, I’m sure Apple could be as stringent about them as they are about product visual quality, if they so chose. Which they don’t: not a priority.

      • Kizedek

        Off-the-shelf technologies? Like, CNC’d one-piece construction, their own touch screen specs determining multi-touch sensors, and how they are layered in the glass; special lamination techniques for their screens; antenna as part of phone body; unseen pin-holes in aluminium for lights; colour management; sub-pixel rendering; power management; their own battery technologies; firewire and lightning; magnetic power cord couplings; magnetic smart covers; sapphire camera lenses…

        As far as Intel: core for core, yes, Intel can probably get higher yields on their processes than someone else. But since Apple isn’t taking off-the-shelf processors, they have to get *someone* to make the chips to their specs. Apple has in-house designers in the form of PA Semi, so the “designed in California” is important.

        A Taiwan fab may not yet be able to produce the volumes of an Intel or Samsung with the same yields perhaps, but if they are interested in moving to the same “off-the-shelf” technologies as Intel or Samsung (smaller scale processes, etc.) then Apple will probably invest in that and guarantee to fill some production capacity. There would be a relationship built.

        Yes, on their own, a new fab plant isn’t quite an Intel, but WITH Apple, it has potential: the 10 odd billions Apple is investing in capital expenditure each year can sure do something. Furthermore, IF there are some new technologies that are unique to Apple, then investing with a second tier fab plant is exactly the way to make them happen — not relying on Intel which has its own agenda.

        And how stringent do we know that Apple are or are not about labour? They investigate it, make inspections and get monthly reports; they publish their findings; they make more stringent regulations than anyone else part of their terms of doing business; they are frank when asked; and they invest in the companies…

      • Fairhead

        Do countries prices still depend on the phone in certain contract?

    • collins RUDZUNA

      You are absolutely spot on on 2. Not all markets work as they do in the US and the developed world. Here (Zimbabwe) carriers have only recently started selling iPhones. They are still ridiculously expensive for the average consumer and the take up is pathetic. iPhone happens to be one of the most expensive cellphones you can buy, at least $1,000 here. So the short answer is iPhone is just too expensive for some markets. There are Nokias and Samsungs that cost as low as $100!

    • Fairhead

      4 – Samscum WAS the best
      3 – We buy machines
      2 – see 4
      1 – The iPhone is not sold at 3 price points
      So your comment is proven to be non-core and is cheapest; congratulations

  • Sam

    The iPhone is already a portfolio product if you redefine the portfolio as ‘mobile computing devices’ – the iPod touch, iPhone, iPad mini and iPad 4 make a fairly complete product line. I don’t think it’s a given that a cellular voice contract will define the device category for too much longer.

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  • http://twitter.com/bramus Bramus!

    Regarding #4: if you let your competitor execute the plans of your work (which he then has full access to), you can more easily sue him if he builds something likewise?

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  • http://www.noisetech-software.com/Home.html Steven Noyes

    Walt: When you guys did the iPod, Steve joked it was good to have products that was above five percent share. One of the things you did was to create a range of iPods, not just last year’s model. In one famous moment, that you probably were involved in, you killed off the mini. You just killed it and brought in the nano. You wound up with this whole range of things. You haven’t done that with the iPhone.

    You got your #1 question in. Congrats.

  • Walt French

    Well, unfortunately the vacuous answers to #1 and #3 that several of us expected; #2 and #4 untouched while the only passion went into… taxes.

    At least Cook stayed true to form, highlighting benefits to its consumers, occasionally mentioning news such as their EPA hire, that address consumer interests, if not meaning much to business analysts.

    At least I *THINK* the hire doesn’t foretell a shift by Apple.

  • Slurpy2k12

    As expected, not a single question asked approached the intelligence or insight of any of the ones you mentioned. Basically all regurgitations of vacuous hit pieces/senational headlines we’ve seen in the past several months, childish questions that Cook obviously wouldn’t answer, and regurgitation of the whole tax BS. I could have came up with dozens of questions that would have provoked intelligent discussion, beyond the WHEN ARE YOU COMING OUT WITH A TV? WHEN ARE YOU COMING OUT WITH A WATCH? WHY NOT A BIGGER PHONE? It’s embarrassing.

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