Apple Analyst Meeting Conference Call

[MacRumors]

Apple posted a quicktime stream of their 2003 Analyst Meeting.

A recap from yesterday provided interesting quotes and comments from Apple and Steve Jobs.

Relevant quotes from the Q&A Session:

Q: "Any plans to support or license WMA going forward?"
Jobs: "We decided to support an open audio codec standard rather than a proprietary one." (AAC) .... "That's our plan and we're sticking to it. We're feeling real good about it too".

Q: "Are you going to allow the iTunes to work with other devices and conversely are you going to allow the iPod to work with other online Music Services?"
Jobs: "We don't know. Right now, there is really little reason to. The iPod is the #1 MP3 player in the world .... The iTunes music store works with the most popular music player around and that's working really well for us. Conversely the iPod is working with the #1 music store. Soundscan just released data today and alst week the itms had over an 80% market share for all legally downloaded music. Why should we work with another music store when we're working with the "Microsoft" of music stores. So, right now we've got an 80%+ share in our music store and we're #1 in units and of course revenue in the iPod. We're investing a lot in that. Got some great stuff coming out over the next... uh... timeframes. And so, right now there's really not reason to spend that engineering on working with #2 or #3 or #4. I'd rather spend our engineering dollars on enhancing the iPod and enhancing the iTunes Music Store. .... Maybe there'll be a reason someday and we're flexible, but right now I think we're spending our money on the path of least resistance to do the right thing."

Q: Question regarding PowerPC/Intel and Mac OS X
Jobs: "Right now we don't see a compelling need to switch processor families and the stuff that's in the PowerPC roadmap -- which you might have heard about already -- is really good, I can't talk about it, but it's really good what's coming."

Q: Can you talk about iPod Pricing, Competitors, Plans for iPod and iTunes pricing.
Jobs: "Apple is as good or better a manufacturer than Dell" .... "We don't worry about anyone beating us on manufacturing or logistical efficiency. And one of the things to remember is that Dell does not sell through channels. Well, When you get down to a consumer product like an iPod, how do most people buy those things? They go to a store, they plunk down their credit card, and they walk away with the product. Most people do not call an 800 number and expect to get it a week later." ...."Cash and carry distribution becomes very important, and you have to pay for that." .... "You'll see some differentials in pricing from companies who only sell through the web and through a catalog vs companies that make the product available to the customer where they want to buy it." .... "But we think we've got the strategic advantage" .... "We're not concerned about pricing at all. We can be as aggressive as the next guy can and more aggressive than most. And we're not concerned about engineering" Goes on the say the other products aren't as good as the iPod.

Re iTunes: "Most of the money goes to the music companies. We are the largest by far" .... "We would like to break even/make a little bit of money but it's not a money maker. That's why when I look at Roxio with Napster and MusicMatch, These guys can never make money. They've started money losing businesses and I'm perplexed as to why." ... "They don't make iPods, so they don't have a related business where they do..."

Q: TVs and Computers?
Jobs: "This is not a new thing. People have been working on this for years. Apple was the first company to ever do this. And there is a small audience that likes this. It is not a large audience" .... "People want 42" and above plasma screens on their wall and they want to view them from far away with their friends or family" "And generally, what they want to view on their television has to do with turning their minds off" .... "Now how do I want to work on my computer? Do I want to work on it 6 feet, 8 feet, 10 feet away with my buddies? No, I want to work on it a few inches away by myself. It's a very very very different experience. We've always believed that this convergence between the computer and the television wasn't going to work. We do believe that there's room for people watching some television on a computer now and then. And we do believe there's a vast opportunity to make televisions more intelligent and home entertainment systems more intelligent and easier to use. But that does not mean that computers and televisions are coming together. And, um, the media center -- basically every young person already has their stereo on your computer - that has come together." .... "but television's another animal. And we don't see it happening in a mass way"

Q: Re: Digital Lifestyle applications. The competition is starting to make some inroads. So, how do you stay ahead? And what is the next big wave?
Jobs: "The way we stay ahead is we stay really close to the customer and keep doing what we do well. For example, digital photo apps. iPhoto is the king of that but even iPhotos have limitations that people are running up against - some major ones - those need to be solved." .... "And there are new categories of applications that people don't even think of yet, that we're working on. So, believe me, we have a lot of innovation up our sleeve when it comes the digital lifestyle/digital hub class of applications - a LOT. And, um, you'll be seeing some of it next year. Very strong stuff."

[DanUk2003]

I've just listened to the Call, and some interesting comments from Steve Jobs about their "digital hub" apps.

He was saying that they're going to move into new areas in the very near future. But for the life of me, I cannot think what else Apple could create digital-lifestyle Apps for:

They've already got music, photos, movies and DVD's covered, what else is there?!?!?!?!?!

Any ideas?!?!

[jxyama]

i wonder if they will do an even better integration of phone/pda than isync alone. i don't think apple will make a phone/pda themselves but perhaps a closer partnership with a phone/pda maker to provide even better integration?

another area i thought they could improve is desktop publishing. i think webpage authoring is fairly specialized and for people who want to do it easily, there's .Mac. but for desktop, maybe there is a market to enable quick and easy publication that's better than MS Office but not as sophisticated as Quark - integrating iPhoto and some kind of a drawing software?

[x86isslow]

did he just compare itms with micro$uck? omg he did:

Why should we work with another music store when we're working with the "Microsoft" of music stores

now thats negative association. why does steve-o keep saying dumb things like that.. anyone else read the newsweek interview? he sounded like he was high.

[MrMacMan]

Let me tell you 'it' is great, 'it' kicks ass, but I can't tell you what 'it' is... sorry


arrrggggg.

Since the question is about Mac X on x86 I suppose he means project Star Trek... but you never know...

[strider42]

Originally posted by DanUk2003

They've already got music, photos, movies and DVD's covered, what else is there?!?!?!?!?!

Any ideas?!?!

They could probably do some create things with simple pieces of home control hardware that could be controlled wirelessly, integrating other appliances more seamlessly with the computer (TV, etc). I'm sure there's lots more out there too.

[jxyama]

well, jobs just used Microsoft to mean a dominating figure in a market. hate M$ all you want, but when you got 95% share of a market (deserved or not, "properly gained" or not), that's dominance. and iTMS is dominating (if 80% figure is to be believed) the online music downloading market...

[Macco]

That whole Microsoft comment is sort of counterproductive. If Apple is unwilling to develop iTunes so that it will work with other players, just because the iPod is the most popular player, what reason is there for companies to develop software for the Mac when the overwhelming majority of PCs run Windows?

Yes, I know that Apple is only integrating the iPod to encourage sales and so on, but I'm just making the point that some people could take this comment the wrong way.

[jxyama]

Originally posted by MrMacman
Let me tell you 'it' is great, 'it' kicks ass, but I can't tell you what 'it' is... sorry


arrrggggg.

Since the question is about Mac X on x86 I suppose he means project Star Trek... but you never know...

i think the quote was just generally about PowerPC, Intel, etc. not specifically about porting OS X to x86. (Which, i believe, is a point that's been argued quite well that it won't happen and will do nothing but harm to apple.) i think he was more referring to the future of PowerPC chips... what's next..? a low power consumption G5-mod chip for PB? hmm... (ok, i've been here for quite a while now and know that the G5 chip itself seems to do fine in the power consumption and probably could be fitted into a PB as is. but the fact remains that more than once apple stated how G5 PB is not yet ready and apple will have to work on it...)

[Computer_Phreak]

Personally, I think Job's reasons for not adopting better compatibility with ITMS and with the iPod towards competitors, is pure BS.

How much would it cost to implement WMA playback, or OggVorbis playback, into the iPod? Practically nothing! It wouldn't take much more to integrate other music players into the ITMS either, or playback of other formats in iTunes, either!

Of course, they don't need to support them now, but then again, no one needs to support the mac platform at all. Sure, WMA might not be great, but why not support it? To try and lock people into using proprietary software and hardware (ITMS and iPod)? Seems like Microsoft-esque tactics to me.

"We're the best, so screw the rest" is the attitude that I'm seeing here.

[jxyama]

Originally posted by Macco
That whole Microsoft comment is sort of counterproductive. If Apple is unwilling to develop iTunes so that it will work with other players, just because the iPod is the most popular player, what reason is there for companies to develop software for the Mac when the overwhelming majority of PCs run Windows?

Yes, I know that Apple is only integrating the iPod to encourage sales and so on, but I'm just making the point that some people could take this comment the wrong way.

i can sort of see your point, but i don't think you got it quite right... the fact is, for creative professionals, apple commands a lot better marketshare. so adobe, maya, etc. make creative professional applications for apple because there's a viable market. they aren't doing apple a "favor" and porting those applications. they do so pretty much on their own term to take advantage of a market.

i'm glad apple will be spending its money to better its services instead of playing nice to its competitors. this is pretty much a "fair" competition.

if apple, after achieving hypothetically 95% share in the mp3/online music industry, suddenly decided to squash any competitors by countering any new entrants with discounted ipod giveaways and exclusive tie-ins with majority ISPs, then that would be a monopoly.

[Ja Di ksw]

too bad there wasn't a slip up "coming out over the next . . . uh . . timeframes" Whenever I get a computer (I'm about as close to buying a powerbook as I can be without having called them up) I always get really worried that I'm going to buy something, and 2 weeks later something fantastically different or better is going to come out, much larger than the leap between what I buy and what came before it.

[Le Big Mac]

Originally posted by strider42
They could probably do some create things with simple pieces of home control hardware that could be controlled wirelessly, integrating other appliances more seamlessly with the computer (TV, etc). I'm sure there's lots more out there too.

Yep, a wireless (or wired) media device, so I could have my computer in one room and hook this up to tv/stereo, and stream itunes, or iphoto pics, or imovie. Basically like Tivo home media option, without hte payment to tivo and with better apple integration

[jxyama]

Originally posted by Computer_Phreak
"We're the best, so screw the rest" is the attitude that I'm seeing here.

while you put it a little more crudely than i'd like, this is the essence of a competitive market. "we are the best, now try to beat us."

what apple is offering and exploring is an emerging market of complete solution to portable music player and online music purchasing. i think this is one of the reasons wma and ogg vorbis aren't supported - they like to offer "complete" (and seamless) solution. it has always been apple's strength to offer a solution that's well integrated and complete at the expense of customizability. i don't think they will be changing their business model anytime soon. they cater more to people who just want things to work easily and completely. it's their believe that they don't want to confuse their market by offering too many choices. whether such an attitude is somewhat "elitist" or "dumbs down the customers" is debatable, but it seems apple is doing fairly good these days.

ipod/itms is a vertical market integration and does nothing to suppress the competition. what M$ got is a horizontal integration. if i make a new flavor of soda that takes off, i am not obligated to share my ingredients with any of my competitors. (it's "proprietary.") however, if i took advantage of my dominance by buying up all the glass/plastic/aluminum drink container factories, then there's a problem.

[FlamDrag]

I guess I take it this way; Apple isn't going to spend any $ to make the iPod work with Napster, but if Napster (or BuyMusic / WalMart etc) wanted to allow the iPod to work with their software, nothing's stopping them.

OK SOMETHING might be, but it's difficult to be shocked that Apple is going to make their stuff work with their stuff and that's about all. That's the way things have been for awhile and why should we expect things to change now?

Furthermore, I expect that it would actually cost money for iTunes or the iPod to support .wma Unless I'm mistaken, MS owns the wma format and Apple would have to pay MS to license the format and/or codecs.

I'm more interested in what's going to come out in the "...uh...timeframe..." than anything else which was said. It seems to me that if it were within the next 3 or so months, he would have said "soon" over 9 months, it seems like he'd just say "in development" or "next year". In short, I think we'll see something new and different in 4-6 months. I know, I know, that's pretty specific.

Finally, his comments about the PPC roadmap are rather exciting. Hopefully we'll keep getting faster machines sooner. Less expensive - no - much much faster - let's hope.

[ITR 81]

I don't think Apple will ever support an MS std unless it has too..just like MS will never support an Apple std unless it has too.

The std that Apples using is the way to go and rest will soon follow.

[coopdog]

We decided to support an open audio codec standard rather than a proprietary one." .... "That's our plan and we're sticking to it. We're feelingrealgood about it too".

DO you think he is taling about Real media or Real Audio codec? I think it is kind of a strange choice of words. Isn't proper english "really good" not "real good." Whatever

[the_mole1314]

It sounds more like Steve was talking about doing AAC instead of WMA for iTunes, not what the iPod would support. But that's opinion.

[Stella]

Looking at those q /a above, SJ is incredibily arrogant.

Comparing iTMS to microsoft is soo wrong. Apple could see market share drop quickly - the music store arena is going to be very crowded soon with every man and his dog jumping on the boat - even Walmart now!
Apple cannot expect to sustain such a high market share.

Apple should be working towards making iPods work with other music stores - it will do iPods good - make them more attractive - iTMS is there to sell iPods - so make other music stores the same - from Apples view.

What did SJ mean by
"And we're not concerned about engineering".

I assume its apple saying "We've got the iPod right"??

I agree - if Apple can't make profit from music stores - how can companies who rely on the Music Store alone? Record companies have to be paid still, doesn't leave much left for the business...

[dongmin]

I thought his comments about MusicMatch and Napster were quite astute. How are they going to make any money? According to Steve, Apple is hoping to just break even. (Contrary to what people are saying, Apple doesn't make 33 cents a song; rather, that's their share per song; once you figure in the cost of marketing, server space, engineering, and whatever costs there are with managing the whole thing, Apple is lucky to break even.)

I can't talk about it, but it's really good what's coming.

even for Steve, this seems to be a bold statement. Maybe the 90nm 970 IS right around the corner. And the 980 in 2004!

[ITR 81]

No other Music Store has been able to really take on Apples Music Store. Napsters store has been buggy and folks have said it's not that easy to navigate as iTunes Music Store.

By yr end I bet Apple will have around 90% of the marketshare.

Now for folks saying it's getting crowded well isn't the OS business crowded as well?? Look at MS with over 80% of the market share and rest being UNIX, OSX, and Linux based. So to me if MS can do it then so can Apple just in the Music market instead of OS.

[Freg3000]

Very exciting. About 2 months to MWSF '04 right?

[macMaestro]

Originally posted by Freg3000
Very exciting. About 2 months to MWSF '04 right?

Yeah. Sounds like we might be seeing a lot of new stuff. Can't wait!

[commandZ]

What a weird and contradictive interview. “Our music store is the ‘Microsoft’ of music stores”. Is this a good thing, Steve?

I think Steve-O needs to put down his joint, stop the interview, and go work on his OS!

[MikeMo]

Originally posted by Computer_Phreak
Personally, I think Job's reasons for not adopting better compatibility with ITMS and with the iPod towards competitors, is pure BS.

The point of iTMS is to sell iPods. Making iTMS support other players would be absolutely stupid. Note the part where he points out that the other download services are money-losers from the start, since they can't make money just selling downloads.

Now, making the iPod support the other services might make sense. He'll probably do that when they start selling a lot of songs!