iPhone, Earnings Call – Whoa!

Scaling / April 25, 2007 / Alykhan Jetha

I listened to today’s earnings call and Peter Oppenheimer (Apple’s CFO) said something that blew me away. In retrospect it makes total sense.

On Mac OS X, we are used to seamless software updates. Periodically, the Software Update panel comes up and informs you of new updates. You can select what you want, hit the download button, authorize and boom your computer is updated. Even grandma can do this.

Well – how would you like that with your phone? New software and new versions (of the OS and apps) from Apple and you just get them – seamlessly. Flipping brilliant!
I mean, yes, you can update your smartphone, but have you tried doing it? It’s a nightmare.

Apple is even changing how they are accounting for the revenues based on this continual updates scheme. Oppenheimer said they are going to leverage “what they do best” and that is software (about 7 minutes into the call also around 2:12pm pacific). It is interesting that most people lust after Apple hardware, but they consider software as what they do best.

When Steve Jobs announced that the iPhone has Wi-Fi built in, I thought that was kind of strange. I mean it wouldn’t be strange in Europe or Asia, but in North America it is. The carriers want all your air time. That’s one of the reasons in North America, we get the Nokia E62 (without Wi-Fi) and in the rest of the World, you get the E61 (with Wi-Fi). Apple must have insisted on that and one of the reasons is seamless software delivery! Verizon balked and Cingular(AT&T) saw the future.

Microsoft “the software company” doesn’t have this kind of infrastructure, reach or vision. No wonder the Redmond boys are quaking in their boots and spreading the FUD. They are going to look like real dinosaurs very very soon. These boys are being made irrelevant by the likes of Google and snookered by Apple where they least expected it (Windows Mobile). It must be dark days at Microsoft HQ. Looks at this interview with Ballmer:

Do you see what I mean by snookered? I really don’t think they realized the whole “software” angle of the iPhone.

So Apple will start with the basics, then over time, deliver new and improved apps directly to your phone. I guess Microsoft’s FUD strategy makes sense now. It’s all they’ve got.

Until next time…

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