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Steve Jobs Rips iPad Competitors During Q4 Earnings Call

by on October 18th, 2010

Today Apple released their 2010 Q4 earnings, which surpassed the expectations of analysts. Here’s a brief breakdown of the important numbers:

  • Record revenue of $20.34 billion (year ago quarter: $12.21 billion)
  • Net quarterly profit: $4.31 billion (year ago quater: $2.53 billion)
  • International sales accounted for 57% of Q4 revenue.

Apple Products Sold

  • 3.89 million Macs (27% increase over year ago quarter)
  • 14.1 million iPhones (91% increase over year ago quarter)
  • 9.05 million iPods (11% decline over year ago quarter)
  • 4.19 million iPads

The number of iPads sold surpassed Mac sales! It’s evident that the iPad is making waves in the tablet/PC industry, as its popularity is only going to grow.

During the conference call, Steve Jobs surprised everyone by chiming in. Normally he doesn’t participate in these live calls, other than his quotes in official PR releases. This time around, Steve Jobs had a lot to say about Google, RIM, and tablet competitors. Here is the part of the transcript that’s relevant to iPad users:

Second, I’d like to comment on the avalanche of tablets poised to enter the market in the coming months.

First, it appears to be just a handful of credible entrants, not exactly an avalanche. Second, almost all of them use 7-inch screens, as compared to iPad’s near 10-inch screens. Let’s start there.

One naturally thinks that a 7-inch screen would offer 70 percent of the benefits of a 10-inch screen. Unfortunately, this is far from the truth. The screen measurements are diagonal, so that a 7-inch screen is only 45 percent as large as iPad’s 10-inch screen. You heard me right – just 45 percent as large.

If you take an iPad and hold it upright in portrait view, and draw an imaginary horizontal line halfway on the screen, the screen on the 7-inch tablets are a bit smaller than the bottom half of the iPad’s display. This size isn’t sufficient to create great tablet apps, in our opinion.

Once you increase the resolution of the display to make up some of the difference, it’s meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one-quarter of their present size. Apple has done extensive user testing on user interfaces over many years, and we really understand this stuff. There are physical limits on how close you can put elements on a touch screen before users can not reliably tap, flick or pinch them. This is one of the key reasons we think that 10-inch screen size is the minimum size required to create great tablet apps.

Third, every tablet user is also a smartphone user. No tablets can compete with the mobility of a smartphone. It’s the ease of fitting into your pocket or purse. Its unobtrusiveness when used in a crowd. Given that all tablet users will already have a smartphone in their pocket, giving up precious display area to fit a tablet in their pocket is clearly the wrong tradeoff. The 7-inch tablets are tweeners – too big to compete with a smartphone, and too small to compete with an iPad.

Fourth, almost all of these new tablets use Android software, but even Google is telling these tablet manufacturers not to use their current release, Froyo, for tablets and to wait for a special tablet release next year. What does this mean when your software supplier says not to use your software in their tablet, and what does this mean when you ignore them and use it anyway?

Fifth, iPad now has over 35,000 apps on the App Store. This new crop of tablets will have near zero.

And sixth and last, our potential competitors are having a tough time coming close to iPad’s price point, even with their far smaller, less-expensive screens. The iPad incorporates everything we’ve learned about building high-value products… for iPods and Macs. We create our own A4 chip, our own software, our own battery chemistry, our own enclosure, our own everything. And this results in an incredible product at a great price.

The proof of this will be in the price of our competitors’ products, which will likely offer less, for more. These are among the reasons that we think that the current crop of 7-inch tablets are going to be DOA: Dead on Arrival. Their manufacturers’ will learn the painful lesson that their tablets will be too small, and increase the size next year, thereby abandoning both customers and developers who jumped on the 7-inch bandwagon with a …product. Sounds like lots of fun ahead.

Looks like another classic Steve Jobs ‘shoot from the hip’ rant about upcoming tablet competitors. Jobs may seem very arrogant in his rant, but it’s true. We’ll wait and see for competitor tablets to emerge and watch their sales closely. The RIM PlayBook is still vaporware, and the Samsung Galaxy Tab seems like the only viable “competition” to the iPad.

What do you think of Steve’s tablet rant? Do you agree or disagree with what he said?

[PC Mag]

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Posted under: iPad News

  • Wuju

    I do like the current iPad dimension. Only wish it’s lighter and have the same retina display as the iPhone 4. Don’t need it to be 7 inches.

  • Aloombox

    I can’t imagine why anyone would want a 7″ tablet, but hey each to her/his own. I love the iPad as it is, just wish I could print and air sync. I might be one of the strange ones, but I don’t want to have a camera on my iPad.

  • http://www.iphoneincanada.ca Gary

    Printing in November.

  • http://twitter.com/Egnaro Rick Mason

    I’ve used the Galaxy Tab. It’s great. The screen size difference is almost not even noticeable in difference compared to the experience on the iPad. What is different is how much more comfortable it is to hold, particularly in one hand. It’s also much more likely to fit into the average purse or small bag.

    Now on to Jobs’ failed logic:
    “Once you increase the resolution of the display to make up some of the difference, it’s meaningless unless your tablet also includes sandpaper, so that the user can sand down their fingers to around one-quarter of their present size. Apple has done extensive user testing on user interfaces over many years, and we really understand this stuff. There are physical limits on how close you can put elements on a touch screen before users can not reliably tap, flick or pinch them. ”

    Isn’t this basically saying that the iPhone is useless then? If a screen has to be 10″ to make it usable than that means the iPhone is fundamentally even more flawed than a 7″ tablet.

    As for the dimensions, these 7″ tablets actually adhere to the 16×9 aspect ratio of HD video meaning you actually get to make use of the full screen when watching HD content, unlike the iPad which letterboxes anything that’s 16:9.

    “Fifth, iPad now has over 35,000 apps on the App Store. This new crop of tablets will have near zero.”

    So what about all the 1000′s of existing Android apps? They don’t count? And quite frankly, the web browsing experience is what makes a tablet shine, the apps are secondary.

    Jobs is doing a little fear mongering here. He’s seeing underwhelming sales of the iPad and massive growth in the market for Android and the real possibility that RIM may have a killer piece of hardware that only further secures their dominance in the Enterprise market.

    Ultimately the closed app based model that Apple is making a killing on right now is going to die. There are enough viable platforms on the horizon or here already that use open web technologies and also support Flash/AIR development for apps. Developers are steadily moving towards these platforms because they provide the broadest consumer reach for their efforts.