Essays on Technology and Culture

Apple’s Priority

The takeaway from Apple’s iPhone 5S and 5C announcement by most people was that Apple had released some fairly boring new phones, one with a plastic case, and the other with a fingerprint reader in the home button. Apple, for the umpteenth time in a row, utterly failed to do what the technology pundits said they should do, which was release a cheap phone to cut into the low end of the cell phone market, dominated by cheap Android phones. Some of the wishful thinking on the part of pundits was misinterpreted as rumor, and so the Apple post-announcement stock price has tanked. Again.

We’ve seen this before. The pundits demanded Apple release a netbook. They got the MacBook Air, which is decidedly not a netbook in anything but size—an 11" model that came out nearly three years after the original. The last time Apple took the advice of pundits was to license their operating system to hardware clones. It damn near killed them. Only the return of Steve Jobs, who quickly shut down the Mac clones and turned the company towards a small, focused product line brought them back to profitability. Something they haven’t had a problem with since.

Apple doesn’t behave like a regular company. It’s not that they don’t want their products in everyone’s hands. Instead, they decided they’d rather make money selling high quality products at a significant margin. I doubt they would mind if every smartphone sold was an iPhone, they’re not going to do it if it means making cheap iPhones that don’t meet their standards. As recent history has shown, Apple’s market share as a priority rests somewhere between making sure there’s decent coffee in the break rooms and keeping the metal floors at the Apple Stores polished on the list that Tim Cook keeps taped to the mirror in his master bathroom.

Who should we listen to? The pundits who keep insisting Apple needs to do x to be successful, or the quality of the devices we choose to use, and the quarterly profit statements and massive cash hoard that seem to say Apple’s doing something right. I’ll opt for the latter. That’s not to say Apple doesn’t have some hubris, embodied in charts that show total iPhones sold since ’07. What that little exposé ignores, however, is the spikes in iPhone sales that come with each new release keep getting higher. It also ignores the far more important principle that Apple is making plenty of money from iPhones. They make more money in smartphone sales than any other company. Even if Samsung overtakes them, they’ll still be making money hand over fist for a while.

Selling quality products to a dedicated audience is a great way to make money. It works for Apple, and it works for Jonathan Coulton. Of course, JoCo isn’t publicly traded (yet). If the prevailing wisdom on Wall Street is that market share is more important than profitability, it should make people question Wall Street more than Apple. [1] Certainly this line of thought explains Amazon’s stock price. It’s a problem of conflicting philosophies, and the only real remedies are for Apple to either take the company private, which would be difficult and costly, or tough it out until people come to their senses.

Thinking about it, maybe they should go for the take-private. It would probably be easier.

  1. It’s safe, I think, to assume Wall Street doesn’t give a crap how good a product is, as long as they sell.  ↩