Our conversation with Peter continues as he asks the nuclear question:
“…remember when Apple was about pleasing customers rather than Wall Street?”
Fair enough. So let’s look at some of the assumptions herein. The most ambitious one is that actual iPhone customers are not happy with the current version. ChangeWave Alliance survey for early adopters (geeks who’d likely be most demanding and critical) says otherwise:
“Better than three-in-four (77%) owners report they are Very Satisfied with their Apple iPhone and another 15% say they are Somewhat Satisfied, for a combined 92% Satisfaction Rating – the best we’ve seen for a cellular phone device.”
I’m more often than not skeptical of these kinds of numbers (and there have been a few surveys, including the 94% satisfaction rate cited by Apple) but, no matter how you slice it, it would be unreasonable to declare iPhone customers as not being pleased. Could they be happier? Sure, but that’s technology for you, as Jobs would put it.
What were the compromises Apple made here? The one that bothers Peter the most is the fact that you can’t use your iPhone with any GSM carrier. Would that have been nice? Sure, if the risks were low and the benefits high.
Pretend you’re Steve Jobs. (You know you want to. :-) If, as rumored, you could get $350 from AT&T (and also from other carriers in Europe and Asia) for every iPhone contract via exclusivity, would you feel you have a fiduciary duty to take the money? Money that can allow Apple to grow its mobile business, among others. Money that Wall Street would have severely punished Apple for leaving it on the table.
Was this just playing it “safe,” as Peter puts it? What would a non-suicidal alternative be? We know one thing: the two largest handset manufacturers Nokia and Motorola have for over a decade not done anything like what Apple did in just a few months. They haven’t for instance, challenged operators’ overwhelming dominance in price negotiations, design of device hardware and software, contract terms or service accessibility. They sell hundreds of millions of handsets annually but they haven’t had the wherewithal to realign the business model whereby everything is dictated by the carriers.
So if you wanted to change this business model of orifices, as Jobs described it, would you play it safe, as the Nokias and Motorolas of this industry have been doing for many years, or rewrite some of the key rules, from pricing to UIs, as Apple has done with the iPhone?
Yes, there was a time in the mid-’90s the dysfunctional, beleaguered Apple would do crazy stuff like introduce ‘innovate’ hardware and software without much deep thinking or market-winning strategies and then wonder why they were getting little traction. It nearly killed the company. With the second coming of Jobs, those days are over.
Apple has by far the best fiscal discipline among all computer and CE manufacturers. Jobs says he’s as proud of the products Apple didn’t ship as the ones it did.
Technology packaging is an art of balance, and thus compromise. We can’t fault Apple for compromising; perhaps the only question remaining is if the balance is right. And Peter wonders about that very question:
And no one will ask what could have been…
If the overwhelming majority of iPhone customers are pleased, who are we to judge otherwise?
You may also be interested in this counternotions article:
Nokia N81: Ominous lesson to iPhone from carriers, from which this discussion emanates.