The first 15 minutes of Apple’s earnings call today were not all that surprising, although the numbers were impressive. Quarterly revenue at the end of the company’s fiscal year (late September) was $20.34 billion, making this the company’s biggest quarter ever. This exceeded analyst expectations and predictions, so big score for Apple. Then things got really interesting when Steve Jobs got on the call and started ripping his competitors a new one.
First Jobs turned to RIM, crowing that the iPhone’s sales have once again outstripped BlackBerry. And with the introduction of the PlayBook, Jobs said that RIM has a “high mountain” to climb back to superiority in the mobile space. Jobs left his choicest comments for Google’s Android platform, all while taking a swipe at 7-inch tablets like the Galaxy Tab.
He slammed the search giant for positioning Android as open as opposed to Apple’s system, which is closed. Mind, he did not deny that this was true, exactly. Instead, he reframed the argument in terms of fragmented vs. integrated systems.
There are hundreds of Android handsets on the Global market and 100 different versions of the OS when you account for proprietary tweaks (such as HTC Sense). With iPhone, there are really just two operating systems users and developers need to concern themselves with: the current iOS version and the previous one. Most iPhone users have the current version, the previous generation, and maybe the generation before that. A max of three iPhones to worry about as opposed to a sea of Android phones.Plus, there are now about to be major competing Android Markets, including Amazon’s rumored entry. According to Jobs, how is a developer supposed to keep up?
This is a significant problem for developers, of course, but Jobs also says that this isn’t great for users, either. With the iPhone, the “user isn’t forced to be the systems integrator,” as Apple does that work for them. “Users want products that just work.” Without actually denying that Android is an open system, Jobs essentially said that this position is a smokescreen for the real problem of fragmentation. It was an artful swerve.
Next Jobs turned his attention to the tablets out to challenge the iPad’s dominance in the burgeoning tablet market. Though his comments seemed general, Jobs’ focus on tearing down 7-inch tablets left the impression that he was speaking mainly of the Samsung Galaxy Tab, which is one of the most high-profile of the 7-inchers hitting shelves this holiday season. He not only dismissed these tablets for their Android operating system, but also for having screens that are too small.
That you lose screen real estate when going from 9.7 to 7 inches is obvious, but Jobs painted a dire picture by saying that a 7-inch screen is only 45 percent as large as an iPad. This is due not only to the size, but the aspect ratio; the iPad is still 4:3, while the Galaxy Tab and a couple of other models are 16:9. Even if manufacturers were to up the screen resolution to make up for the lost inches, Jobs said that this is “meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one quarter of their present size.” Ouch.
As graphic as this metaphor is, we’re not convinced that the experience on a 7-inch screen is just so much more horrible than a 9.7-incher. Samsung, for example, has done a lot of its own integration work on the Galaxy Tab to optimize is apps for that size display, including its Media Hub store for downloading movies and TV shows. In the end, Jobs was unequivocal in his disdain for 7-inch tablets, claiming that they will be DOA, and that manufacturers will then turn to a more iPad-like size, further fragmenting Android and enraging both developers and users in the process. Jobs also pointed to a statement by a Google employee that Froyo was not optimized tablet friendly.
Though the iPad’s sales numbers were lower than some analysts predicted — 4.19 million in the last quarter instead of the 4.7 – 5.5 million that some experts estimated — Jobs betrayed no hint of disappointment in his magical tablet. He claims that he was surprised by how many businesses are using it, and speaking to the product’s trajectory over the new two years, he said that the iPad offered a new model of computing, and that since Apple already has tens of millions of people trained to use it (via the iPhone) “The iPad is clearly going to affect notebook computers. It’s not a question of if, but of when.”
So what do you think? Will 7-inch tablets sell, or will they just be received as tweeners?