A couple of days ago, Steve Jobs sat down and spoke to analysts about Apple results, and future plans. It was quite an interesting read.
Jobs would never come out and say outright that he considers Apple to be in the luxury category, as that that's one of those things best left unsaid if you don't want to annoy your customers. More acceptable is "there are some customers which we chose not to serve." As noted yesterday, I think Apple was right not to lower prices. Gucci doesn't race to put its products in Target at the first sign of economic flu.
Brand has always been a critical part of the Apple strategy (and a slightly higher price is part of that), and that will only be increasingly important in recessionary markets. Android phones are now on sale at places like T-Mobile, but you aren't going to see lines around the block the way I did outside the Apple store at "The Grove" in West Hollywood for the release of the iPhone 3G. Android will sell, but they will have a hard time generating the enthusiasm that Apple seems to create with seemingly little effort (obviously, looks are deceiving, as I am under no illusion that such enthusiasm is easy to achieve).
With the iPhone, it seems that Apple has caused lightning to strike twice (the first strike being the iPod). Apple, apparently, has become the 3rd largest phone supplier, at least when measured by revenue. Granted, that's not a measure of market share per se, but is an astounding figure nonetheless, and given the enthusiasm around the iPhone, is a figure likely to continue growing. Apple has made 4.6 billion with the iPhone thus far. That's about a third of what Nokia made in the same period, which is astounding for a company that only started selling mobile phones 15 months ago.
I remember when Microsoft first started to try competing in the cell phone space back in 2002. I was working at Orange in Switzerland at the time (Orange is a mobile phone subsidiary of France Telecom), and they were one of the early licensees of a phone that ran Windows Mobile.
Granted, those were early days, and it would have been obscenely expensive to try to build a phone with a touch-screen interface the way Apple did 15 months ago. On the other hand, it shows just how long that Microsoft has hammered away at this market. To put it mildly, the results aren't exactly what Microsoft executives would have preferred.
The reasons aren't terribly hard to fathom. As anyone who has owned a Windows Mobile device understands (and I admit my lack of experience with Windows Mobile 6.0), it has long sported a user interface that was suprisingly adept at hiding all those amazing features a Windows Mobile device supposedly included. This was partly complicated by small screen sizes (and I said as much to colleagues at the time; why waste space with a keypad when it is not always used on a smartphone), but also due to the ridiculous notion that Windows Mobile had to look a bit like desktop Windows.
Apple is particularly adept at creating consumer-oriented user interfaces. That made it possible for them to create a phone device that made complex features easy to use. That's it. Lead time, in other words, is all but useless if you don't spend the time making the right kind of product.
This bit was particularly interesting:
"I think that the traditional game in the phone market has been to produce a voice phone in a hundred different varieties. But as software starts to become the differentiating technology of this product category, I think that people are going to find that a hundred variations presented to a software developer is not very enticing. And most of the competitors in this phone business do not really have much experience in a software platform business."
"So we're extremely comfortable with our product strategy going forward, and we approach it as a software platform company, which is pretty different than most of our competitors."
Apple now sees itself as a software platform company. That certainly seems warranted. I still think the single smartest move Apple has made in a while, at least from a software architecture standpoint, was sharing the guts of Mac OS across its product line. That's what you do if you want to become a software platform.
I still, however, consider the the Mac software platform to be somewhat medieval...at least from an API standpoint (and yes, I know people disagree with me on that, and also accept that part of my discomfort is an extreme dislike of "Objective C"). But, if you make an enticing product that gets a large enough market share (and the iPhone seems well on its way to doing that), you get to become the platform. Windows didn't have a wonderful API back in the WIN16 / WIN32 days. Apple doesn't have to, either.
Perhaps Apple will spend its pile of cash on improving its platform story. I've long said that Microsoft's competitive advantage, should it choose to use it (a problem in itself), is its skill at software platforms. Apple's advantage was in the hardware and consumer interface categories. If Apple improves its story as a software platform (it already has the hardware / interface chops), that could change the game entirely.