During Apple’s investor meeting everyone is focused on what Tim Cook or Peter Oppenheimer are saying, but few are focused on what they are not saying, which Apple leaves for us to either intuit or deduce. The juxtaposition of the past quarter numbers, which analysts are focused on, to Apple’s long term view provides striking contrast on the way the two camps think.
For example when Tim Cook says they will have successive flat quarters, analysts are thinking lower demand, problems with supply, or some other malady, where Apple is thinking strategically, by lowering margins for the first quarters of a product life cycle they can gain acceptance and market share more rapidly, and then leverage the incredibly strong ecosystem of apps and media to make up for that reduction in margin, and then some.
When Tim Cook said he won’t introduce a big screen iPhone that is a compromise in key characteristics, what he didn’t say was that Apple is working to solve these problems, and likely have prototypes that are near complete. And when Tim Cook said the following, he left analysts with nothing concrete, but hinted towards big things down the road:
“We see great opportunities in front of us, particularly given the long-term prospects of the smartphone and tablet market, the strength of our incredible ecosystem, which we plan to continue to augment with new services, our plans for expanded distribution, and the potential of exciting new product categories.”
When asked by Bill Shope, of Goldman Sachs, how Apple plans “to reinvigorate your share gains across your key product categories?” Tim again did not provide specifics, but did say:
“…we are continuing to invest in innovative products and feel really, really confident about our product pipeline in both hardware, software”
He said “really” twice, to emphasize the products yet to come, and reiterated that when he said to Gene Munster, “one of our areas for growth are potential new categories, and we’re very excited about those.” And we know whenever Apple enters a new product category, they either invent it, or redefine the standard. So, this is very encouraging, and it’s understandable that the analysts couldn’t get all gaga, they never understood Apple, it doesn’t fit their conventional thinking.
When asked by Shannon Cross of Cross Research, “…you outperformed substantially the competition but we’re still down about 2%. So I am curious as to whether or not you think elasticity of demand with lower prices or what you are hearing from your customers in terms of their reluctance to buy a new Mac.”
And Tim went on to elude that this down market presented an opportunity to innovate and perhaps gain market share with the Mac, eve if it is only relative than absolute numbers of Macs shipped.
“That said, I don’t think this market is a dead market or bad market by any means. I think it has a lot of life to it. We are going to continue to innovate in it. We believe that if anything the huge growth in tablets may wind up benefiting the Mac”
And finally Tim Cook did an excellent job, at least I thought so, describing the stark contrast in penetration of iOS devices in the enterprise compared to “the other guys.” Cook used that throughout the presentation referring to Samsung and others. Cook said:
…the Good Technology’s data that says that iOS accounted for 77% of all their activations by their corporate customers. Now that would not include BlackBerry, but it would include all the other guys…I’ve seen more and more people developing more and more custom apps for their businesses on iOS to be used on iPad and we’re very, very bullish on it…iPad now is being used in 95% of the Fortune 500 and what’s even more impressive probably is on the global 500 companies, we’re now in 89%.
I believe what Apple is doing now that Microsoft is weakened and the other PC manufacturers are fighting for their life, that Apple will make a major push towards the enterprise. This time it’s gonna be a nice cozy warm sell, since they’ve already won over all the decision makers with iOS devices.
What did you read between the lines?
What is your take?