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Apple’s Jobs rants at Google, suggests big acquisition

by Scott Bicheno on 19 October 2010, 13:19

Tags: Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG)

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The case for closed

Google must really have Steve Jobs worried in the mobile space, why else would he attend an earning conference call - which he doesn't usually do - and speak at great length about why Apple's approach is better than Google's?

Thanks to Macworld, we haven't had to transcribe the call ourselves, so we'll get on with commenting on the key bits. Jobs started by crowing about the iPhone.

"We sold 14.1 million iPhones in the quarter, which represents a 91 percent unit growth over the year-ago quarter, and was well ahead of IDC's latest published estimate of 64 percent growth for the global smartphone market in the September quarter," he said.

"And it handily beats RIM's 12.1 million BlackBerrys sold, in their most recent quarter ending in August." Jobs went on to say he doesn't fancy RIM's chances of recovering lost ground because of the difficulties of changing itself into a software platform company. Microsoft, HP and Nokia weren't even mentioned.

Google, however, was. Pausing for a brief statistical pissing competition, Jobs moved on to address the ‘closed versus open' debate that characterises comparisons between Apple's and Google's approaches to mobile. To be honest most of it was an already well-trodden path about whether it's better to have one optimised device or an ecosystem of disparate devices, each with their own interpretation of the platform.

This debate has been going on since the 80s. Apple will continue with an integrated approach and many people will buy into it, while many others won't. Most Windows users are well aware of its shortcomings and the compromises that come with the amount of choice it offers, but choose Windows anyway. Android has become the Windows of the mobile world.

Jobs moved on to scoff at the perceived avalanche of tablets set to take on the iPad, which you can read all about in our earlier report here. As one reader has already commented, Jobs is on shaky ground saying smaller screens equal an inferior experience, but he had a point when he said: "The seven-inch tablets are tweeners: too big to compete with a smartphone, and too small to compete with an iPad."

Jobs made the very valid point that Android isn't even optimised for tablets yet, something Google has confirmed. He said that, for these two reasons, he expects the first wave of rival Tablets to be "dead on arrival" and we fear he may be right. Time will tell.

Onto the Q&A, Jobs was asked about Apple TV. He revealed that Apple has already sold over 250,000 of them and he expects the product to become even more appealing when you can use it to stream content to your Apple mobile device using AirPlay.

Asked about phone market share, Jobs stressed Apple doesn't want to be like Nokia (presumably a retort at Nokia's recent statements). "Nokia makes $50 handsets, and we don't know how to make a great smartphone for $50. We're not smart enough to have figured that one out yet, but believe me I'll let you know when we do," he said.

The penultimate question concerned Apple's enormous pile of cash, and why it's not returning some of it to investors. While you could argue Apple's share price seems to be taking care of itself quite nicely without huge dividends, Jobs suggested a very intriguing reason for sitting on its $51 billion cash pile.

"We strongly believe that one or more very strategic opportunities may come along, that we are in a unique position to take advantage of because of our strong cash position," said Jobs "And so I think that we'd like to continue to keep our powder dry, because we do feel that there are one or more strategic opportunities in the future. That's the biggest reason."

Just to put that $51 billion into perspective: AMD's market cap is around $5 bn, ARM's $8, Dell's $28, NVIDIA's $6.5 and Nokia's $40.