Apple’s (s aapl) quarterly earnings call is primarily a retrospective affair. They report their numbers for the previous quarter, discuss strengths and weaknesses (and what made them strengths and weaknesses), and spend a little bit of time talking about how they plan on continuing and repeating success next time out. In the end, the only clear message they present is that they’ll keep doing what’s working, and improve on what isn’t. At the same time, they’re dropping hints about the future. Here are some of those hints, and what I think they mean.
We Love the $199 Price Point
On the subject of iPhone pricing, Tim Cook, Apple COO standing in as CEO while Jobs is recuperating, made clear that their $399 and $199 price points were working well for the company. Quite specifically, he emphasized the company’s love for the $199 price point, which is clearly leading to high sales numbers. Interestingly, he didn’t talk about storage size, just pricing.
We could see a pricing move based on strong sales and a shrinking consumer smartphone market that may result in a $199 price point for the 16GB iPhone to stimulate sales. Whether this also leads to a lower cost 8GB phone or a 32GB model, I can’t guess, but we will mostly likely see a pricing change when sales start to dip.
We Have Some Ideas, But Right Now We Think Those Products Are Inferior
The netbook saga/flirtation/denial continues. They’re spot on about the hardware deficiencies when they point out that the keyboards on these devices are still too small, and about the software not being well-tailored to the platform as of yet. Which shows that they’re thinking much more deeply about those issues than the offhand remarks would seem to suggest.
Make no mistake, Apple is developing a device for this space. And they’ve targeted the specific issues their competitors have so far failed to address, which means they probably intend to come to the market late but with a superior product. This could be the reason they sought to separate “OS X” from the “Mac” moniker, if they’re preparing a version of the OS specifically designed to run on netbook hardware.
We Feel Extremely Good About Our Product Pipeline
This comment was made in reference to their projections about iPhone seasonality. They also made a followup comment noting that Apple has fear in terms of the danger of the economy affecting smartphone adoption, considering the higher monthly rates that come with them.
References to the product pipeline in this context are extremely tantalizing. What does Apple have in its pocket to offset the threat of smartphone contract prices? Two possibilities come to mind. Either they think that upcoming iPhone iterations will be impressive enough to attract consumers anyway, or they’re planning on moving away from the smartphone market to take advantage of lower contract costs. In either case, references to product pipelines should not be taken lightly.
That’s my take on some of the more salient points of the Q1 conference call, the content of which I reviewed thanks to CNNMoney’s transcript of their live blog of the event. You may think some of my predictions are reaching or far-fetched, but they all come from an analysis of the context within which the statements were made. Whether you agree with me or not, share you own interpretations below.