Steve Jobs, What Happened To You?

Steve Jobs made a rare appearance during the company's FQ4 earnings conference call. His Jobsness said that he could not help dropping by because of Apple's first $20 billion quarter. But there was something else. Steve was pissed. Really pissed.

Imagine that. Apple now rakes in more than $20 billion in revenue per quarter and projects about $23 billion next quarter. There's a good chance that Apple will blow past that one again. That would make the company about twice the size of Intel and potentially 30-50% larger than Microsoft. Is that still the same company Michael Dell once suggested should shut down and its shareholders a few cents back?

You would think that Steve Jobs could have celebrated this day relaxing in his office chair, with a smile on his face and the reflection of a 33 year history of Apple on his mind. The iPhone has changed the cell phone landscape forever and Apple could still sell more than it can produce. The iPad is now selling more units than Macs. Even if you could make fun of the word "magical" that Jobs likes to use as a description for the iPad, this is an amazing accomplishment. 

However, Jobs decided to join analysts and journalists, to rip into iPhone and iPad rivals. You tell me how that makes sense. If there was ever a wrong time to criticize its rivals, then it was that conference call.

Vulnerability

I am not a psychologist, but it was the first time ever that Steve Jobs did not provide a feeling of superiority. It was quite the contrary, Jobs felt, in his very own way, vulnerable to me. He gave the impression of being attacked and hit by Google and there was just as much personal passion in his statements as business reasoning. Some may refer to that as another episode of the Steve Jobs distortion field, but I am not so sure if it worked this time. You can listen to Steve Jobs' memorable appearance here. The text transcript is also available here.

What made me think is that Jobs felt compelled to reply to Google's claim of shipping Android phones, their app store, Google's open Android model and, most importantly, the upcoming wave of Android devices. Was that really necessary. Not that I complain, it is always an experience to listen to Steve Jobs, but aren't we able to do the math ourselves? Would it have been a better decision for Jobs to let the numbers speak - 14.1 million iPhones sold in the quarter, resulting in $8.6 billion hardware revenue and $610 average selling price per device?

If Apple is a superior as Steve Jobs claims, were the comments really necessary or should have Jobs been quiet or simply talked about the success of the iPhone and iPad without trashing RIM and Android? To me, Jobs' speech revealed at least some concern about his rivals and may even revealed that Jobs is doing too well with Apple's rivals using the same strategy Apple has been using against its competitors. I sense personal vulnerability. Donald Trump might advise Jobs that, especially what Google does, is nothing personal. It's just business.      

Truth versus Marketing

Steve Jobs left no doubt that he is not too happy with Google's claims that the open model of Android is working very well for them. As far as I can recall, Google does not actively pitch the story that they will win over the iPhone in particular, they simply claim that they want to be the leading player in the mobile OS field, which appears to be a reasonable claim, given the fact that they are offering their very competitive OS for free, including necessary support and the freedom to modify it. Apple does not allow anyone else to use its OS.

Jobs called the claim open versus close a  "smokescreen" and he said that we should be comparing fragmented versus integrated instead. His rant targeted the claimed 200,000 activated Android phones every day, whereas the iPhone hits 300,000 on some days. He dissed Android tablets which, in his opinion, are too small to be great tablets and too large to compete with smartphones (which may be their primary competitors for dollars.) In a way, Jobs indicated that what we hear about Android may not be exactly true and reality may look a bit different.

Seriously?

We are hearing this from the company that has mastered the art of deception in advertising and marketing (hold back your angry comments just yet) and a company that really has not worried too much if its claims in advertising are true. Think about the PowerPC times and claims that the chips were much faster than Intel's Xeons, which we all knew was not the case. What about all those PC vs. Mac ads, which were funny, but occasionally just as false as hilarious. Or what about that iPhone 3G ad that claimed the iPhone was twice as fast for half the price (it was not really twice as fast and just as expensive, if you count the necessary cost of the 2-year contract.)   

Companies will always walk on thin ice to leverage the advantages of their products and hide their deficiencies at the same time. Apple needs to realize that Google is learning and is playing a very smart game. In a way, the Jobs rant may exactly be what Google wanted: It provoked Jobs and he reacted when he should not have. 

We all know that Android isn't perfect and we see that it has passed the iPhone in popularity in some markets. However, that is a homemade problem from Apple and it is up to Apple to solve it. It simply needs to produce more phones than it does now. It needs to open iOS, but we know that it cannot, which needs that Apple needs to concede defeat in numbers sold. But who cares? The company makes $20 billion a quarter and Google needs an entire year to make just as much.    

It is interesting to remember that Jobs' comments sound familiar. More than 20 years ago, he said the same things about the PC and we know what happened. Of course, the situation is slightly different and Apple has a market cap of $300 billion these days. However, there are those who claim that the simple fact of Apple's closed, sorry, integrated, iOS will limit the company, in the end, to 5% market share in mobile computing again. Apple may have changed the way we perceive computers, but that has happened before and Apple did not dominate the desktop space either.

What Steve Jobs should have done

Simple: Jobs should have focused on his own success and the iPad. He changed his tone later in the Q&A of the call and, in my opinion, his moment came when he noted that he believes that "he has a tiger by the tail" with iPad. "it is really big," he said. Without actually sitting next to him, you could see the pride in his eyes when he stated that. In response to his rivals, a benefit of the doubt would have been appropriate, while calling iPad rivals dead on arrival was a bit premature, even for Jobs. I personally prefer a 7" tablet over a 10" version. 

There was no need for Steve Jobs to criticize rivals. We all know that the iPhone and iPad are amazing accomplishments and products that are tough to match let alone to surpass.

However, the sharp remarks make us wonder what prompted Jobs to leave his agenda and show this kind of concern and vulnerability. How concerned is Steve Jobs about Google really?