[Q: if your aspiration for iPhone and iPad to be volume players and market leaders or is it simply to make good products and if you have smaller share like you do in Mac that's fine can you help me with that place.]
Nokia makes $50 handsets, and we don’t know how to make a great smartphone for $50. We’re not smart enough to have figured that one out yet, but believe me I’ll let you know when we do. And so our goal is to make really breakthrough great products, make the best products in every industry that we compete in, and to drive the cost down while constantly making the products better at the same time. That’s what we did with iPod. We updated our products many times every year with better functionality, often times at same price and sometimes at a lower price. And it was the relentless improvement at in some cases a lower price, that was able to beat our competition and yield the market share that it did.
And as you know we have a very low market share in the phone market, in the single digits, in terms of all the handsets. And we have a very high market share now in tablets, because we’re the first mover. But we don’t think about it that way.
The reason we wouldn’t make a seven-inch tablet isn’t because we don’t want to hit a price point, it’s because we don’t think you can make a great tablet with a seven-inch screen. We think it’s too small to express the software that people want to put on these things. And we think, as a software-driven company, we think about the software strategies first. And we know that software developers aren’t going to deal real well with all these different sized products, when they have to re-do their software every time a screen size changes, and they’re not going to deal well with products where they can’t put enough elements on the screen to build the kind of apps they want to build.
So when we make decisions on seven-inch tablets, it’s not about cost, it’s about the value of the product when you factor in the software. You see what I’m getting at? So we’re all about making the best products at aggressive prices. And that’s what we will do. And that’s what we’ve done with the iPod, and that’s what we will do with the iPad as well.
[Q: if the market starts to move towards somewhat lower functionality smartphones]
You’re looking at it wrong. You’re looking at it as a hardware person in a fragmented world. You’re looking at it as a hardware manufacturer that doesn’t really know much about software, who doesn’t think about an integrated product but assumes the software will somehow take care of itself. And you’re sitting around saying, well, how can we make this cheaper? Well, we can put a smaller screen on it, and a slower processor, and less memory, and you assume that the software will somehow just come alive on this product that you’re dreaming up, but it won’t. Because these app developers have taken advantage of the products that came before, with faster processors, with larger screens, with more capabilities that they can take advantage of to make better apps for customers. And they’re not… it’s a hard one, because it throws you right back into the beginning of that chicken-and-egg problem again, to change all the assumptions on these developers. Most of them will not follow you. Most of them will say, “I’m sorry, but I’m not going to write down a watered-down version of my app just because you’ve got this phone that you can sell for $50 less, and you’re begging me to write software for it.”