Apple's Cook Won't Find Peace From Competitors
Apple CEO Tim Cook said he doesn't want Apple to be "the developer for the world." As the market leader, however, that's exactly the position in which Apple has put itself.
Apple's most recent quarter was clearly a success. The company raised revenue of $39.2 billion with a quarterly profit of $11.6 billion. Though there was some worry that iPhone sales would be soft, they weren't: Apple sold 35.1 million of them during the quarter, which showed 88% growth year-over-year. iPad sales notched 11.8 million units, demonstrating 151% year-over-year growth. Mac sales climbed 7% to 4 million desktops and laptops. The only portion of its hardware business that saw a decline was the iPod, which dropped 15% to 7.7 million sold during the quarter.
"We're thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter," said Tim Cook, Apple's CEO. "The new iPad is off to a great start, and across the year you're going to see a lot more of the kind of innovation that only Apple can deliver."
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Based on comments made by Apple's management team during its analyst call, they are mostly pleased with the performance. They should be. The company has enough cash on hand to buy most of its competitors. Each analyst chiming in to pester Apple CEO Tim Cook and CFO Peter Oppenheimer during the call congratulated the company on its success. Despite the successful quarter, Cook expressed frustration with certain aspects of the business.
Several of the questions revolved around the numerous lawsuits facing Apple in courts in the United States and around the world. Last year, former Apple CEO Steve Jobs said that he believed Android was a "stolen product" and that he would go "thermonuclear" on competitors for violating what he believed to be Apple's intellectual property. When asked directly about the lawsuits, Cook replied, "I've always hated litigation and I continue to hate it." But, he continued, "We just want people to invent their own stuff."
[ What does it mean that 600,000 Apple computers have fallen victim to the Flashback Trojan? See Mac Trojan Fallout: Apple Security Glory Days Gone? ]
Cook implied that he'd be happy to settle the litigation if Apple and its competitors "could get to some kind of arrangement where we'd be assured [they are inventing their own products] and get a fair settlement on the stuff that's occurred." However, Cook said that will only happen if "Apple does not become the developer for the world."
I hate to break it to you, Tim, but that's never going to happen.
Google's Android platform may have more momentum in the market right now, thanks to its larger ecosystem, but clearly Apple has set the stage for the modern smartphone and tablet businesses. The iPhone, first introduced in 2007, has inspired dozens of me-too products, as has the popular iPad tablet. This is the way competition works, it's Business 101. Look at any other industry and you'll see the same thing.
Company A invents Product B and Product B is a huge success. Before long Companies U, V, and W have created Products X, Y, and Z, all hoping to ride the coattails of Company A's success in the market. Those copycat products may fail, or may even surpass the original. It's a pattern that will be repeated endlessly until businesses--as they operate today--no longer exist.
As the market leader, Apple will always face this conundrum. It did with the original iPod, with its all-in-one desktop designs, and now with the MacBook Air (think Intel's Ultrabooks). You can't set benchmarks and then expect no one to follow.
The one other interesting comment that came to light during the press call was about device convergence. Cook has said in the past he believes tablets will outpace desktop and laptop computers to become our primary computing platform in time. When asked whether or not the company would consider creating a converged, hybrid tablet/laptop product, Cook responded with a great line.
"Anything can be forced to converge, but the problem is that those products are about tradeoffs, and you begin to make tradeoffs to the point where what you have left doesn't please anyone," Cook said. "You can merge a toaster and a refrigerator but those things aren't going to be pleasing to the user. To make a compromise in convergence--we're not going to that party."
He's exactly right. The tablet and laptop form factors each have their own pros and cons, and mashing them together will likely produce a device that's nothing but cons.
During Apple's first quarter, it made a ton of money. This appears to be rote for the Cupertino-based firm. The best way for Apple to stave off competitors isn't for it to sue them out of existence, but to continue to produce unique and segment-creating devices that others can't successfully replicate. Cook promised that the year to come should offer plenty such products.
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