There's one phrase from Apple's conference call with analysts on Tuesday that has resonated with me, and that was when CEO Tim Cook talked about the importance of customers being able to “access the entire ecosystem” with Apple's products.
As with everything that Tim Cook says, those words were very considered and deliberate, but I doubt analysts and investors will pay attention to the message. That message is simply that Apple isn't interested in market share for market share's sake, but that's something Wall Street has never understood.
Let's look at the comment in situ (emphasis added):
What we did with our lineup this time was the 4s is replacing the 4. If you look at the US as an example, the 4s is now free. The 4 was free previously. When you translate that out of the US, it depends on the market as to what specifically happens. Currency changes and the strength of the dollar doesn't always play in our favor in some goes. We see the 4s as our entry iPhone offer that gives somebody the ability to access the entire ecosystem as a fantastic product. We understand that there is elasticity in that market and it will move accordingly.
I realize that some people were reading rumors about that the entry phone would be the 5c, but that was never our intent obviously. Our entry iPhone is the iPhone 4s[…].
This phrase, “access to the entire ecosystem” was repeated later in the call. It was clearly a concept that Mr. Cook wanted to make sure analysts understood. Apple believes the value proposition of Apple's ecosystem is a valuable asset, and the company's isn't going to devalue that asset by shipping products that can't access that value.
What this means in terms of products is that Apple has determined that a “cheap” iPhone that plays better in emerging markets and will capture market share from all those cheap Android devices that make up the vast majority of Android share wouldn't be capable of running enough apps on the App Store or accessing all of Apple's services. It wouldn't deliver an Apple experience.
This is borne out by the repeated observation that Android owners don't do very much with their devices, a point CFO Peter Oppenheimer made during the call. This is most true at the low end, and that's the end that Wall Street and mainstream pundits want Apple to pay attention to.
It makes no sense. It never has, and Apple has tried repeatedly to explain that. Tim Cook and the late Steve Jobs said repeatedly that Apple's goal was to make the best products it could. That message has been crystal clear and consistent from Steve Jobs to Tim Cook, but Wall Street is wired to think that market share is all that matters.
This new idea, the importance of shipping products that give customers access to the entire ecosystem is a new way of explaining it. It will be interesting to see if it's effective. I doubt it, but it's interesting to watch Mr. Cook try.