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Federighi, Cook, and Ive  (Source: Bloomberg)
Cook, Jony Ive and Craig Federighi talk about the new iPhones, market share and the competition

Only a week after the big iPhone 5S/5C reveal and a day before their launch, Apple CEO Tim Cook says he isn't worried about iPhone market share, and even managed to throw a few stones at the likes of Nokia and Google's Android. 

Bloomberg BusinessWeek's Sam Grobart sat down with Cook to talk about Apple's place in the mobile market, and whether Cook is worried that competitors like Android will continue gaining market share in various areas as Apple continues to offer luxury-priced phones that appeal to only certain markets. 

“There’s always a large junk part of the market,” said Cook during the interview. “We’re not in the junk business. There’s a segment of the market that really wants a product that does a lot for them, and I want to compete like crazy for those customers. I’m not going to lose sleep over that other market, because it’s just not who we are. Fortunately, both of these markets are so big, and there’s so many people that care and want a great experience from their phone or their tablet, that Apple can have a really good business.”

Apple recently announced the expected high-end iPhone 5S, which has a starting unsubsidized price of $650. The iPhone 5C, which was believed to be a budget version of the iPhone for emerging markets like China, was expected to be priced at a "budget" range. However, its unsubsidized price is only $100 less than the 5S. 

While Apple is working hard to make deals with China Unicom, China Telecom and China Mobile, many wondered if Apple would be able to sell to this market considering the still-high price of the iPhone 5C. 


iPhone 5C

“We never had an objective to sell a low-cost phone,” said Cook. “Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.”

Google's Android is a good example of an operating system that spans both high and low end smartphones, offering a vast price range for those looking to shop on either side of the spectrum. This gives Android the ability to reach various markets, and continue gaining market share. In fact, IDC said nearly 80 percent of the world’s smartphones run Android. It also said the average unsubsidized price for a smartphone fell from $450 to $375 last year. 

But Cook brushes this off, saying that customers tend to buy Android devices and dump them in a drawer while an iPhone is the smartphone they truly use.

“Does a unit of market share matter if it’s not being used? For us, it matters that people use our products. We really want to enrich people’s lives, and you can’t enrich somebody’s life if the product is in the drawer.”

Cook added that he doesn't see Android as just one entity competing against Apple. Rather, the operating system is so fragmented that many users are running versions as old as Gingerbread from three years ago. 

Here's a breakdown: About 45 percent of Android users are on Jelly Bean, the latest version of Android, while 31 percent are still on Gingerbread and 22 percent are on Ice Cream Sandwich. Apple says 93 percent of its users were on iOS 6 at the end of June.


iPhone 5S

“And so by the time they exit, they’re using an operating system that’s three or four years old," said Cook. "That would be like me right now having in my pocket iOS 3. I can’t imagine it.”

Apple's idea is that having one company work on both the hardware and the software makes a big difference when it comes to user experience, instead of Google's method where Android is given out to various hardware manufacturers like Samsung. 

Jony Ive (senior vice president of Design at Apple) and Craig Federighi (senior vice president of Software Engineering at Apple) -- who also took part in the interview -- agreed that the new iPhones marry hardware and software better than other smartphones. And while the iPhone doesn't receive new OS versions or updates as often as Android, they said that Apple doesn't just push out new features for the sake of having them; they take the time to perfect them, and make them better than anyone else. 

“New? New is easy. Right is hard,” said Federighi.

Cook also addressed the Apple/Microsoft comparison of the 1990s, where Microsoft licensed its Windows operating system to hardware makers like Dell and Hewlett-Packard while Apple only used its operating system on its own Mac hardware line. This allowed Microsoft to gain a ton of market share at that time while Apple's plummeted, and many wonder if Apple is making the same mistake in its competition with Android. 

Speaking of Microsoft, Cook said the recent $7.2 billion purchase of Nokia's devices and services unit shows that more companies are trying to follow Apple's lead. He also took a jab at Nokia, saying that it's failure to innovate led to its end as a mobile leader.

“Everybody is trying to adopt Apple’s strategy,” said Cook. “We’re not looking for external validation of our strategy, but I think it does suggest that there’s a lot of copying, kind of, on the strategy and that people have recognized that importance.
 
"I think [Nokia] is a reminder to everyone in business that you have to keep innovating and that to not innovate is to die.”

The iPhone 5S and iPhone 5C hit store shelves tomorrow, and while iPhone market share sits below that of Android and Apple stock has taken a dive since its $700+ high last September, Cook believes that the company is doing the right thing.

Source: Bloomberg Businessweek



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RE: Man
By half_duplex on 9/19/2013 12:26:22 PM , Rating: -1
Highly doubt that, people are excited about iOS 7 and the new 5's.

Of course, you're going to see a 70+ post Apple-hate orgy in the next hour or so, but like Tim said, he's not very interested in 'that' market, they're happy enough with their Android os.

I will say that calling Android junk is a little too much, he needs to stay the high road. Saying things like that are the same types of things that really turn me off to Samsung.


RE: Man
By invidious on 9/19/2013 1:05:34 PM , Rating: 3
You can only milk a cow so long before you need another cow.


RE: Man
By Tony Swash on 9/19/13, Rating: -1
RE: Man
By msheredy on 9/19/13, Rating: 0
RE: Man
By Dorkyman on 9/20/13, Rating: 0
RE: Man
By troysavary on 9/19/13, Rating: 0
RE: Man
By retrospooty on 9/19/2013 6:23:48 PM , Rating: 5
"Now I am going to have to apologize to retro for claiming he was as delusional as you."

LOL... Thank you for that. No-one is as delusional as TS. He's a good guy, but damn, is he off the deep end over Apple. I truly believe he wants these things to be true.


RE: Man
By Samus on 9/20/2013 4:23:45 AM , Rating: 2
If you say something enough to yourself and ignore all feedback, it becomes true in your world. Swashworld is all that matters to him.


RE: Man
By retrospooty on 9/20/2013 10:25:36 AM , Rating: 2
"If you say something enough to yourself and ignore all feedback, it becomes true in your world. Swashworld is all that matters to him."

Yup... To Tony, Apple is a shining beacon of light that is to be adored. LOL... The RDF is in full force.


RE: Man
By Cheesew1z69 on 9/20/13, Rating: 0
RE: Man
By Piiman on 9/21/2013 9:32:01 AM , Rating: 2
He probable sits in his car looking at the line whacking off. Tony get out of the car and go whack off in line or you may not get that new shiny Iphone. Come to think of it if you go whack off in line you probably won't get one either at least not until you get out of jail. Hey but don't let that stop you the iPhone is worth a little jail time. lol


RE: Man
By ihateu3 on 9/20/13, Rating: 0
RE: Man
By momorere on 9/20/13, Rating: 0
RE: Man
By retrospooty on 9/19/2013 1:21:31 PM , Rating: 5
" he needs to stay the high road. "

He should. Any time an exec says anything about the competition, just shows they are worried about the competition. He should just publicly say nothing. Talk about their new stuff and sales #'s , all impressive. Stooping to insulting the competitors really comes off as petty coming from execs, this goes for any company.


RE: Man
By robinthakur on 9/20/2013 12:49:29 PM , Rating: 3
Agreed, The minute the CEO starts actually comparing Apple's products to downmarket value-oriented devices, the premium brand will start to suffer by that very comparison, even though he was careful to be clear, people not familiar with the smartphone market might misunderstand. Apple have always chased the slightly more well-healed for the margin and they should totally not stop. It would be like Louis Vuitton doing a capsule collection for Walmart.

There are premium branded Android offerings, but even these do not have the currency or hold their value as well as Apple's phones due to being replaced in the market so quickly and featuring cheaper looking and feeling designs, or not being able to run the newest version of Android.

The fact that glass and metal are not robust is actually useful for Apple, because they are trying to emulate luxury watch construction, and really, who throws their Rolex around? It's not like they don't make a bunch of cash replacing smashed iPhones for a fee, anyway.


RE: Man
By spamreader1 on 9/23/2013 12:44:23 PM , Rating: 2
True, though I gotta admit, I find Microsofts latest round of commercials poking fun at the things the ipad lacks hilarious.


RE: Man
By m51 on 9/19/2013 2:52:58 PM , Rating: 3
Apple makes good quality products and they charge a premium for that. I have no issue with that, I'm willing to pay for quality design.

However my smartphone use is dominated by screen use, not as phone use. No matter how good the other features of an iPhone get if they don't start offering a larger screen iPhone I'm jumping ship and getting an Android phone next. Most other iPhone users I know are also getting frustrated with the small screen size.

I'd bet that Apple stock wouldn't have lost any value if they had brought out a phone with an increased screen size for the 5s, and $100 cheaper on the 5c.

I hope they are starting to hear the alarm bells in Cupertino.


RE: Man
By w8gaming on 9/19/2013 11:48:14 PM , Rating: 2
Apple is too smugged about they being the first to be wildly successful in smartphone and that has blinded them to the fact that many customers want features that Apple does not currently have, but can offer if they CHOOSE to, yet they CHOOSE NOT to. Hence, their market share keep shrinking. If I am an investor in Apple's stock I will be worried. After 2 years, Apple senior management still fails to see the signs and realize what they should do.


RE: Man
By Kiffberet on 9/20/13, Rating: -1
RE: Man
By OoklaTheMok on 9/20/2013 12:59:46 AM , Rating: 2
People who buy iPhones also buy iPads... make a big iPhone, and they will likely sell fewer iPads...


RE: Man
By cfaalm on 9/20/2013 7:24:30 AM , Rating: 2
Your logic sounds plausible, but it doesn't seem to bother Samsung. They've got about every screen size covered.


RE: Man
By spaced_ on 9/22/2013 2:36:14 PM , Rating: 2
Samsung have pursued market share instead of chasing high profit margins. Some of their own devices cannibalise their own margins - in the end they have the mind share.

They have always had this strategy before they started making phones and other companies often struggle to compete with them in many markets as a result.

Apple is worried. They've decided not to pursue market share in 'junk' markets and have pigeon-holed themselves in the 'premium' market. Give it a few more years and see what happens to that market.

We can only speculate now but the actions they're taking and the competition they face suggests they're going to be struggling imo.

I can see why they held off offering a cheaper iphone to capture emerging markets. It could cannibalise their own sales. I have zero idea why they have nothing to compete with their larger screened competitors. Doesn't make any business sense to me.


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