From our point of view, it’s important that Apple not be the developer for the world. We can’t take all of our energy and all of our care and finish the painting and have someone else put their name on it. The worst thing in the world that can happen to you if you’re an engineer and you’ve given your life for something is for someone to rip it off and put their name on it.
When you look at [cases in which Apple is being sued for violating patents], the vast majority of those are on standards-essental patents, and this is an area where the patent system is broken today. Standards-essential patents bring the responsibility for the holder to license it at a reasonable rate.
So when someone comes to you and tries to get some obscene level of money from you for this, they’re in essence telling you they’re not going to license because they want to use the court system to do that. In my view, use it in a way it wasn’t intended.
Apple has not sued anyone over standards essential patents that we own, because we view that it’s fundamentally wrong to do that. The intention was some payment be made. And we can always argue about the payment, and there has to be a forum for resolving those disputes.
The problem is, if you add up what they say the patents are worth, nobody could be in the phone business. So it’s kind of gotten crazy. Some of this is maddening, it’s a waste, it’s a time suck. However, does it stop innovation? It’s not going to stop us from innovating, no. But it’s overhead that I wish didn’t exist, and if we can find a way to settle this, then…
I wouldn’t say we dominate [the phone market]. I’d say we have the best phone. Starting at the OS level, you have two OSes that make up the vast majority, iOS and Android. And you have Windows Mobile now beginning to ship and we’ll see how they do. And you have RIM, that is… uh… still serving some large number of enterprise customers. But the momentum right now are in the first two.
Will that change? I think anything can change. The smartphone revolution is still in the early stages. When you back up and look at this, this market’s a billion-unit market three years from now. And a few years after that, I’m not sure you’ll see any phones in the world that aren’t smartphones.
So the opportunity is huge, and there will clearly be changes along the way.
Our north star is to make the best product. Our objective isn’t to make this design for this kind of price point, or for this arbitrary schedule, or line up other things or have X number of phones, it’s to build the best.
And so that doesn’t preclude, there’s not a policy or a commandment, Thou Shalt Have One or whatever. We have an overriding belief of making the best. And so if we find we can do more, great. Do we have to? I think one of our advantages is that we’re not fragmented. If you look at when we introduce a new OS, iOS 5, it’s amazing the percentage of our installed base that’s on the latest OS. That’s not true on Android. We have one App Store. It’s simple and straightforward and all the apps are there. We have one phone with one screen size and one resolution, and so it’s pretty simple if you’re a developer.
It’s very uncharacteristic of us: We’ve stayed in the Apple TV product business, and we’re not a hobby kind of company, as you know. Our tendency is to do very few things, put all of our wood behind a few arrows, and if something creeps in and isn’t a big success we get it out of the way and move on.
Apple TV, you can see what we’ve done, and we’ve stuck in this. Now, it’s not a fifth leg of the stool. It’s not of the same market size of a phone business or the Mac business or the music business or the tablet business. It’s not like that.
But last year we sold 2.8 million Apple TVs. This year, in the first six months, we’ve sold 2.7.
And that was helped by 1080p and movies in the cloud. And so this is an area of intense interest for us. Many of us, the TV that we do watch is almost exclusively on it. That’s what my TV watching is. All of my movies, everything, is coming through Apple TV.
So the customer satisfaction with that product is incredible. It’s off the charts. So we’re going to keep pulling this string and see where it takes us. I think many people would say, this is an area in their life that they’re not really pleased with.
The whole TV experience. So it’s an interesting area. We’ll have to see what we do. Right now, our contribution is Apple TV.
Here’s the way we’d look at it. Not just at this, but other areas. We’d look and ask, can we control the key technology? Can we make a significant contribution far beyond what others have done in this area? Can we make a product that we all want? We think we’re reasonable proxies for others. So those are things we’d ask about any new product category.
This is sort of how we think. How we think about it, how we look at it.
I love the product, but I think Apple TV is more something that you keep pulling the string to see where it goes.
Facebook and Ping
I think the [Apple-Facebook] relationship is very solid. We have great respect for them. I think we can do more with them. And so, just stay tuned on this one. They have their own way of doing things. But people can say that about us as well.
But just because you have different views doesn’t mean you can’t work together. We want to provide customers simple, elegant ways to do the things they want to do. And Facebook has hundreds of millions of customers. And anyone with iPhone or iPad wants to have the best experience with Facebook on any device. So stay tuned.
Apple doesn’t have to own a social network. But does Apple need to be social? Yes. But the ways that we express that today are integrating Twitter into iOS, and you’ll see us integrate Twitter into Mac OS with Mountain Lion. Some people think of iMessage as social. You’ll see more things along that in the future. Game Center is a social activity. And so things like this make our devices even more useful to people. But that doesn’t mean that Apple needs to own a social network.
We tried Ping and the customer voted and said, this isn’t something I want to put a lot of energy into. Some customers love it, but there’s not a huge number that do, so will we kill it? I don’t know. I’ll look at it.
Customers love it. It’s one of the most popular features of our most popular phone. But there’s more that it can do. And we have a lot of people working on this. And I think you’ll be really pleased with some of the things that you’ll see in the coming months, where the breadth that you’re talking about… we’ve got some cool ideas about what Siri can do. And so we have a lot going on on this.
I think Siri’s proven that people want to relate to the phone in a different way. For a lot of years, there wasn’t a lot of invention in the input. Touch came along, and that was cool… And voice, when it understands the context… voice recognition has been around a long time, but what makes Siri cool is that she has a personality. She becomes many people’s best friend.
I think you’ll be pleased where we’re taking Siri.
This is something that people dreamed of for years, I think. and it’s here. It’s really here. Now yes, it can be broader, and so forth, but we see unbelievable potential here. And Siri as a feature, it has moved into the mainstream. People hear the word Siri and they know what you’re talking about. So I think you’re going to be really happy with where it’s going. We’re doubling down on it.
Competing with game consoles
We’re in gaming now. One of the prime reasons buy an iPod touch is gaming. I realize that’s not the big screen that you’re talking about, but gaming has evolved a bit. You have more people playing games on portable devices than on the big screen TV now, so where we might go in the future, you know, we’ll see. But this is an area where customers love games, we want to do things that customers want us to do. I’m not interested in being in the console business, “traditional” gaming. But if you view gaming more broadly than that, then I feel we are a pretty big player today and the things we do in the future will only make that bigger.
[Is gaming on a television set something you’re interested in?]
I think it could be interesting.