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Cook's Interview: Reading Between the Lines

The full text of the Businessweek interview with Tim Cook is now available. I'd like to highlight several of his comments. The whole interview is very much worth reading if you're interested in Apple and have the time.

You know, the first time that you buy something with your finger, it’s pretty profound. It’s one thing to use it as security. This is really cool, and a lot of people will love it, because they open their phone multiple times a day. But the buying is even a more startling experience, in a way.

I'm sure it is no accident that Tim Cook placed emphasis on purchases in the Touch ID discussion. Touch ID has the potential to revolutionize the consumer payments. You can bet that Cook and Apple have been thinking a lot about this and have much bigger plans of one kind or another.

Cook also commented on the speed at which tablets are becoming the default choice for consumers, thereby decimating the PC business:

I have always said that the tablet market was going to surpass the PC market. I was saying that well before it was viewed to be sane to say that. It’s clear that we’re 24 months away from that.

So that probably has accelerated even more than I would have thought over the last year.

As I mentioned yesterday, I believe Apple plans to very aggressively attack what remains of the bottom 70% or so of the PC market in the near future. We may even see something very interesting next at the media event next month.

Cook's goes on to place an emphasis on differentiation as being essential in what will remain of the PC market:

And so to do well in the PC market, you have even more differentiation. There has to be a different reason for buying a PC (rather than a tablet).

In other words, commoditization works best when a product category has broad relevance and a massive audience. As the category fades from relevance for the masses it retreats upmarket to differentiated products that are able to deliver significantly more value to professional users. Apple is likely to continue gaining share not only in the combined tablet / PC market, but also in what remains of the PC market on its own. How strange it is that some continue to insist that the Mac lost (and iOS devices will lose for the same reasons).

Finally, Cook has a few comments on Android fragmentation:

I don’t think of Android as one thing. Most people do. I mean, from a consumer point of view, if you look at what Amazon does with Android, forget the name Android for a minute. If you’re coming down from a different planet and you were going to name it, you wouldn’t name it the same thing as what another company does. If you compared that to what Samsung does, I’m not sure you would name that the same thing either.

I think that the importance of that is overplayed. The truth is that there are more people using iOS 6 than there is any version of Android. And in days from now, iOS 7 will be the most popular mobile operating system. And so what does it really mean at the end of the day to show these share numbers and combine all of these disparate things as if they’re one thing? I’m not so sure it has a great meaning to it at the end of the day.

Does a consumer that’s buying a Kindle think about it being an Android? Probably not. And so I think that’s a bit different than where Microsoft (MSFT) and Windows was.

Of course any meaning that comes from looking at Android as one thing comes in relation to the development platform. The development platform that is meaningful to Android as a whole is the lowest common denominator platform that actually captures the vast majority of Android users. Today that is the nearly 3 years old 2.3 Gingerbread version of Android.

Cook highlights the growing nature of this problem:

it’s not like a baby that becomes an infant. It’s not like that. It’s an exponential. It’s a compounding problem. And think about all these people that they’re leaving behind from a customer point of view. Most people hold on to their phones a couple of years. So in essence, by the time they buy the phone, many of these operating systems are old... by the time they exit, they’re using an operating system that’s three or four years old.

A 3 year lag from the introduction of new platform technology to the time developers can expect customers to have it is a very long time in this industry. Especially when the competition is able to shorten the window from release to adoption by nearly all customers to a few months at most.

Apple sure doesn't seem doomed to me.