Apple COO Discusses iPhone Exclusivity, SDK, and Unlocking

MacRumors · Feb 28, 2008

Apple's COO, Timothy Cook, delivered a question and answer session at the Goldman Sachs Investment Symposium yesterday, and touched on a number of interesting topics. Differing notes available at MacNN, Appleinsider and iPhoneAtlas.

Of interest, Cook answers why Apple hasn't offered an unlocked version of the iPhone. He states that multi-carrier offerings were impractical at launch. For the U.S. market, this would require a CDMA and GSM version of the iPhone. In the end, they felt it was impractical to try to satisfy every carrier and every user. Still, he states that Apple is "not married to any business model" and instead, they're "married to ... shipping the best phones in the world."

When asked about the possibility of Apple expanding into even more areas with new product lines, Cook feels anything is possible, but that each product choice is made carefully since "for everything we do, we know me make a choice not to do something else. We may or may not add some over time, we'll see."

Regarding iPod reaching a saturation point, Cook points out that 40% of iPods are still being sold to those who don't already own an iPod and suggests that slower iPod sales are a reflection of the economy than necessarily sales saturation.

He again describes the iPod Touch as the "first mainstream WiFi portable platform" and also describes the iPhone as a "platform not a product", and states that the upcoming SDK will "broaden the platform more, to the point where the only limit will be peoples imagination." Cook stopped short when asked about when the first 3rd party apps would appear, not wanting to take away any element of surprise from next week's event.

Finally on iPhone Unlocking, Cook acknowledges the problem but states he "look at this 'problem' with a little bit of a smile. Having people stepping over each other for the phone isnt a bad thing. He goes on to state that the best way for Apple to fight back is to offer the iPhone in more countries.

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g-7 · Feb 28, 2008

MacRumors said:
He goes on to state that the best way for Apple to fight back is to offer the iPhone in more countries.

Exactly. It would be great if I could buy iPhone officially in Poland, without the
need to use all those hacks/jailbreaks.

djellison · Feb 28, 2008

He goes on to state that the best way for Apple to fight back is to offer the iPhone in more countries.

Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Why is he so scared of admitting the truth and admit the reason they're locked is so they can have carriers have massive contracts and Apple can skim a percentage from it.

Doug

shadowfax · Feb 28, 2008

very interesting. I was expecting to be irritated by this after reading the portion in which he tries to claim that they would need a CDMA version to offer an unlocked iPhone in the US. On the other hand, It's certainly true that they wouldn't have been able to make the profits they have made and continue to make on the iPhone. I think the current model is acceptable, especially in light of the last portion of this article, which made me smile--that Apple is not concerned about unlockers, viewing their existence as a very good indication that they need to make locked iPhones available to a lot more countries. I think that's fair, and sounds good in light of the recent state of jailbreaking and unlocking.

SvenSvenson · Feb 28, 2008

djellison said:
Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Doug

Too right - what does he know about running a business? Why don't these guys ask people on Internet discussion forums on how to run multi-billion dollar companies?

Steve

jhande · Feb 28, 2008

The really interesting part is still: He again describes the iPod Touch as the "first mainstream WiFi portable platform" and also describes the iPhone as a "platform not a product", and states that the upcoming SDK will "broaden the platform more, to the point where the only limit will be peoples imagination."

Now we've had several people, including Steve, use these terms.

Color me intrigued.......

chickenninja · Feb 28, 2008

i agree, mobile devices should come open for the user to decide what carrier best neets their needs, what would happen if a chinese carrier offered bedrock low prices and put AT&T out of buisness, that would be a big waste of a large stockpile of iphones, if apple threw its weight around it could have every carrier scrambling to make their service iphone compatible instead of sticking to one in fear that you wont be able to support so many carrier qwerks. the future will be like this, and cell service will be universally compatible. apple shuold work with the fcc to build a device which would appeal to every carrier and set a standard for carriers to meet. do not underestimate the power of the i-wave and the furry of its crest in the next generation.

Padraig · Feb 28, 2008

djellison said:
Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Why is he so scared of admitting the truth and admit the reason they're locked is so they can have carriers have massive contracts and Apple can skim a percentage from it.

Doug

I agree. I'm convinced that Apple would have easily cleared the 10 million mark if they sold it unlocked. As it stands they are limiting hugely the amount of potential customers.

In related news, O2 are having a press release for the iPhone here in Ireland today, with March 14th being the day it goes on sale. The Tariffs are going to ensure I don't get one.

MrT8064 · Feb 28, 2008

If apple want to keep trying harder to prevent unlocks then so be it, i just with they would accept that unlocked users are users too, and should not be cut out of SKDs and any other updates.

it would be very sad if we needed to be 'legit' iPhone owners to get SKD apps.

if apple put out a press release saying "we are going to keep making unlocking harder, but to those who have already unlocked, welcome aboard, we are going to stop making it difficult for you"

i would invest in apple today!

nlivo · Feb 28, 2008

Wow. He answered a lot of questions differently than what you see most people from apple do. Bravo. Some good answers. When you think about it...selling the iPhone unlocked, people's phone bills would be crazzzzy with all the internet it uses. Not many contracts have unlimited data usage.

Stella · Feb 28, 2008

I found this interesting,though I don't quite understand their non multi-carrier argument. They say they want to provide users with the best phone - fine... Just create GSM version of the phone and offer it to every GSM carrier out there. Whats the problem?!!!

He should say, its the carrier sharing revenue they are interested in... we all know that.

I wonder if Apple really see the phone unlocking as a real problem, rather than just an annoyance.

Otaviano · Feb 28, 2008

djellison said:
Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Why is he so scared of admitting the truth and admit the reason they're locked is so they can have carriers have massive contracts and Apple can skim a percentage from it.

Doug

Not to mention they would actually hit their ten million mark, actually probably blow right past it.

Stella said:
I found this interesting,though I don't quite understand their non multi-carrier argument. They say they want to provide users with the best phone - fine... Just create GSM version of the phone and offer it to every GSM carrier out there. Whats the problem?!!!

The iPhone is a GSM phone, think you meant to say CDMA. A stupid argument on his behalf, perhaps if your narrow minded and think strictly of the American market. However GSM is the more or less the global standard. They would be fine releasing it globally and unlocked. There is no reason to make a CDMA version.

elcid · Feb 28, 2008

We have had the discussion about this whole unlocked/att thing in so many forums. And it has always been found that while better for the consumer, it would not be better for apple.

They get the upfront sale of the iPhone plus monthly kickbacks from att. Passing on the kickbacks, that will go until a person stops using an iphone (and how many of you owners are about to do that) could mean that they would be passing up years and years of kickbacks.

Apple has always been expensive to own. If they wanted everyone to have an iphone they could have. If they want everyone to own a mac product they could lower their prices and do it.

They're making money hand over fist, they could care less.

As to the OP, it is always interesting to here what they have to say. I like his talk about the SDK. Hopefully there will be a lot of work going into it. Forcing people to charge could really limit the overall effectiveness IMO.

aswitcher · Feb 28, 2008

Would be a lovely surprise to see Australia announced...although the 3G version cant be more than 4-6 months off I think.

RickJames69 · Feb 28, 2008

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SvenSvenson said:
djellison said:

Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Doug

Click to expand...

Too right - what does he know about running a business? Why don't these guys ask people on Internet discussion forums on how to run multi-billion dollar companies?

Steve

man this is deep

phillystax · Feb 28, 2008

Multicarriers right now would be a bad idea

I can't believe some of you who say that Apple should make the iPhone available on EVERY carrier. I mean, yes, that would be the obvious answer and one that I think will eventually be made, but in it's first iteration do you think that EVERY carrier would be able to take advantage of EVERY feature that the iPhone has?

One my favorite features is the visual voicemail. Which is very dependent on the carrier having the right software to be able to handle it correctly. For Apple to insure that this worked correctly on EVERY carrier, we probably wouldn't have seen the iPhone for another 3 years.

It's called quality control and it's something that I LOVE Apple for. I haven't had a virus on my computers in 5 years. None of my Apple computers have EVER had a virus while my friends Windows computers are virtually infested with them.

Apple, or any other company, will never be able to please EVERYONE all of the time but they feel that they can please MORE people by making a very solid, I didn't say completely solid, phone that works better at what it does than most phones.

Maybe if more companies followed these kinds of standards we would see more stable devices when brought to the mass market. The iPhone is still in it's first stages and I think that with each revision we will see not only more features on the iPhone, SDK and 3rd Party Apps, but also more carriers sign on.

Besides, I've read where other carriers like Verizon passed up the chance stating that Apple phones would be too risky.

Maybe Apple was too heavy handed for them, but I think it's just a paradigm shift into letting the phone manufacturer have more of an active role in the game which is not a bad thing. Again, quality control.

-Phillystax

joeshell383 · Feb 28, 2008

Otaviano said:
Not to mention they would actually hit their ten million mark, actually probably blow right past it.

The iPhone is a GSM phone, think you meant to say CDMA. A stupid argument on his behalf, perhaps if your narrow minded and think strictly of the American market. However GSM is the more or less the global standard. They would be fine releasing it globally and unlocked. There is no reason to make a CDMA version.

No, he meant to say GSM. He is saying that, without creating another version, Apple should allow the current GSM model to be sold on all available carriers.

Most of the super-popular phones are available in CDMA and GSM versions. Those companies realize that's just how it's done, as hundreds of millions of customers (about 10-15% of global cell phone market) in the U.S., South Korea, and other countries isn't exactly chump change, especially considering that out of the Big 4, the 2 major CDMA networks in the U.S. are far more developed than the 2 major GSM networks.

However, as mentioned by elcid, I believe, for a number of reasons it was an innovative solution that should bring in more revenue and profits than the more conventional route.

jragosta · Feb 28, 2008

djellison said:
Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Why is he so scared of admitting the truth and admit the reason they're locked is so they can have carriers have massive contracts and Apple can skim a percentage from it.

Doug

Who says he's scared to admit it? It's bloody obvious.

Apple has a business model and prefers to stick to that business model. They are constantly evaluating it and are open to change if the circumstances change.

Exactly what is wrong with that (other than the oft-implied thought that Apple has no right to make money)?

Can · Feb 28, 2008

I just want to get hold of a iPhone. I wonder how many years before they go international.

I think there would be more interest in apple stocks if they took things such as the iPhone and Movie rentals etc and put it out there on the international market, or at least include Europe/Big asian markets instead of putting things US only.

The norwegian market is already flooded with iPhone clones and we have other companies working hard with heavy duty movie rental solutions.

When apple decides to join in on our market (in what? 1 year? 2 years?) they will have a lot less momentum since the thing they release already have competitors and the market is flooded with similar products already.

jonny · Feb 28, 2008

phillystax said:
It's called quality control and it's something that I LOVE Apple for. I haven't had a virus on my computers in 5 years. None of my Apple computers have EVER had a virus while my friends Windows computers are virtually infested with them.

-Phillystax

While I agree with what you're saying in part, I think Apple's QC has suffered greatly over the past few years with new versions of products constantly coming up. I feel like a bit of a broken record here, but a new macbook pro has just come out, and they haven't even fixed the bugs/video issues with the first iteration of Santa Rosa models from last june... So I think Apple is more concerned with maybe the money aspect of it, rather than "controlling quality" as you say. And I could be completely wrong too. That's my two cents

And, I LOVE my unlocked iPhone. Even without visual voicemail it's still the best mobile platform on the market. Colour me impressed.

Otaviano · Feb 28, 2008

phillystax said:
I can't believe some of you who say that Apple should make the iPhone available on EVERY carrier. I mean, yes, that would be the obvious answer and one that I think will eventually be made, but in it's first iteration do you think that EVERY carrier would be able to take advantage of EVERY feature that the iPhone has?

One my favorite features is the visual voicemail. Which is very dependent on the carrier having the right software to be able to handle it correctly. For Apple to insure that this worked correctly on EVERY carrier, we probably wouldn't have seen the iPhone for another 3 years.

I'd love to hear what other features carriers might have a hard time implementing ... dialing perhaps?

We have had the discussion about this whole unlocked/att thing in so many forums. And it has always been found that while better for the consumer, it would not be better for apple.

They get the upfront sale of the iPhone plus monthly kickbacks from att. Passing on the kickbacks, that will go until a person stops using an iphone (and how many of you owners are about to do that) could mean that they would be passing up years and years of kickbacks.

I can't stand how the shareholder mentality has taken over this forum. I want what's best for me as a consumer, not what's best for Apple's stock price.

An argument can probably be made that Apple's tactics in regards to demanding kickbakcs have greatly slowed down their ability to launch the iPhone into new markets. If you do a little hacking on iPhone's released at the end of last October you will find that they are ready to work on Italian carrier TIM. Yet almost 4 months later it hasn't been released in Italy. Could it be that the carrier realizes people will be them and unlock them, and that there is no reason to give Apple money? Maybe the same thing is happening in Canada and other countries. Certainly is possible.

bmk · Feb 28, 2008

djellison said:
Bloody idiot - the best way to fight back is to offer the iPhone NOT CONTRACT LOCKED TO ONE CARRIER.

Why is he so scared of admitting the truth and admit the reason they're locked is so they can have carriers have massive contracts and Apple can skim a percentage from it.

Doug

Padraig said:
I agree. I'm convinced that Apple would have easily cleared the 10 million mark if they sold it unlocked. As it stands they are limiting hugely the amount of potential customers.

Padraig, how can you agree with Doug when your point is logically the opposite of his? Doug is saying that Apple locked the phone so that they could make more money from it. You are saying that if Apple had unlocked the phone they'd have sold millions more and therefore made more money. If, as you claim, Apple is hugely limiting their potential customers by locking the phone, then how can you agree with Doug's point that the reason Apple locked the phone was to scam more money out of it?

kaiwai · Feb 28, 2008

jragosta said:
Who says he's scared to admit it? It's bloody obvious.

Apple has a business model and prefers to stick to that business model. They are constantly evaluating it and are open to change if the circumstances change.

Exactly what is wrong with that (other than the oft-implied thought that Apple has no right to make money)?

Get off it; offer both; a locked an unlocked version. They do that in most other countries; pay full price or get a locked phone for a cheaper price.

Padraig · Feb 28, 2008

bmk said:
Padraig, how can you agree with Doug when your point is logically the opposite of his? Doug is saying that Apple locked the phone so that they could make more money from it. You are saying that if Apple had unlocked the phone they'd have sold millions more and therefore made more money. If, as you claim, Apple is hugely limiting their potential customers by locking the phone, then how can you agree with Doug's point that the reason Apple locked the phone was to scam more money out of it?

How so? Doug's point is that Apple are, as the Americans say, nickle and diming the situation with the iphone. That they are sacrificing a potentially far more lucrative broader market in order to extract extra revenue from those they have locked in.

joeshell383 · Feb 28, 2008

OriginalMacRat said:
CDMA only exists in US occupied countries like Iraq, Afghanistan and South Korea.

It has no relevance in the real world.

Um, like I said, CDMA makes up about 10-15% of the global mobile market. Most phone makers have determined that the BENEFIT of CDMA customers outweighs the COST of creating an additional model. U.S., Canada. South Korea, and Latin American countries make up the bulk of CDMA users. CDMA users have money too, unlike a large percentage of the GSM market, which is in developing countries, that can only afford to buy the cheapest of phones (low-profit margins).

Ignoring hundreds of millions of profitable customers/with subsidizing carriers usually isn't a good thing.

But, like I already said, Apple will probably end up OK because of their approach.

However, on the topic of ignoring hundreds of millions of customers, Apple will need to be careful in China if they take their current approach there. With both of the large firms having hundreds of millions of subscribers, they do they will miss out on a massive amount of potential customers.

Apple COO Discusses iPhone Exclusivity, SDK, and Unlocking

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