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Tim Cook: Damned if He Doesn’t

It appears some members of the media imagine that Apple routinely releases news about upcoming products during the quarterly conference call with financial analysts. I don’t know where that idea comes from, but that’s not the typical Apple venue. Unfortunately, facts don’t matter when it comes to Apple.

True, one might have hoped that Apple would have released some great new 2013 products by now. As April comes to a close, the offerings have been slim. They packed more memory into the iPad by introducing a 128GB version, cut the price of the 13-inch MacBook Pro with Retina display, sped up the 15-inch version, and updated the chip used in the Apple TV. But the new Apple TV is functionally identical to the older version introduced in the spring of 2012.

Making matters worse, Cook’s comments, when it came to new products, consisted of what may charitably be called smoke and mirrors. Yes, there were great products in the pipeline, but don’t expect them to arrive until the fall and throughout 2014. Otherwise, expect a barren desert, although it’s also true that new iOS and OS X versions are expected to be demonstrated at June’s WWDC.

So does that mean Apple must rush out some new products to fill the draught? Clearly that doesn’t work very well. Consider the 2012 iMac, which was plagued by shipping delays. In retrospect, Cook admitted that Apple should have waited until after the first of the year, for Mac sales really suffered in the December quarter. Had the older model, which works perfectly well, been kept in the lineup a while longer, several hundred thousand more units would probably have been sold. People who finally ordered the “2013” version would have been rewarded with relatively prompt delivery. Apple would have looked great starting the new year with a significant product introduction.

Perhaps Cook tried just too hard to show he’s a product guy to prove his mettle. But it may also be that Apple didn’t anticipate how serious the production bottlenecks would be. As a supply chain wizard, you would expect he’d know. But perhaps the situation seemed more favorable in the days preceding the iMac’s introduction. Obviously this is something that we’ll never know unless some real Apple insider reveals the behind-the-scenes by-play, but that’s the sort of competitive information that may not be known for years. Besides, it really only matters to someone who wanted to buy that iMac and had to wait.

Now when it comes to the iPad, if Apple plans major refreshes, such as a thinner and lighter full-sized iPad, and an iPad mini with Retina display, it may take a while to wrap the development process. Announcing these key products prematurely would just put Apple in the same bind as other companies that launch products long before they are ready to ship. At best, would-be customers would have to wait weeks or months to take delivery, which would simply result in a repeat of the iMac situation. There would be a quarter of poor iPad sales without a new product shipping in quantity. The critics seem to miss this point.

As to the iPhone, well perhaps the rumored 5S wouldn’t involve such a huge effort to set up the production lines, since a lot of the heavy lifting was resolved with the iPhone 5. But Apple has traditionally released a new iPhone with a new iOS version. This can be a doubly important packaging decision in an “off-year,” where the improvements to the gadget itself aren’t so major. But Apple could change every single part inside and the critics would still say it’s a minor refresh of the overall design looks the same. Then again, if Apple can resolve what Cook calls the “trade-offs” in designing a larger display, there may very well be a 5-inch iPhone, or at least 4.5 inches, in our future.

Now there are also published reports indicating that Apple’s guidance of lower profits going forward means that a cheap iPhone is in the offing for this fall. But Apple delivered that guidance for the June quarter, blaming the altered product mix for the less impressive numbers. Of course, all this means is that more people want the less profitable iPad mini, or the older iPhones.

This doesn’t mean Apple isn’t going to make a run for market share with a cheaper iPhone by fall. But it may just involve taking older parts, not dissimilar to the iPhone 4s, or today’s iPhone 5, and putting it in a less expensive package. It would be a new model, not a remnant, and if Apple can achieve proper economies of scale, a purchase price of $299, unlocked, wouldn’t be out of the question.

Some critics are simply suggesting Apple used the enhanced stock buyback scheme to placate nervous investors, which is probably true. Others suggest Apple will be concentrating more on software and services than on gadgets in the foreseeable future. But Apple has always been a platforms company. It’s about integrated hardware and software. It’s not the same as one hardware company building the device and installing someone else’s OS. But that’s something still not quite understood by some.

Also not understand is that Apple plays long-term, which means that they do not depend on the results of any single quarter or two to prove to the financial community they are successful. By staying the course despite the intense pressure, maybe Cook did the right thing after all.