Steve Jobs (Apple Co-founder) – CNBC Interview MacWorld 2007 (2007)

Chapters

00:01:07 Apple's Transformative Ambitions: iPhones, Markets, and Competition
00:05:13 Addressing the Stock Options Backdating Scandal: Steve Jobs on His Tenure and Apple's Investigation

Abstract

The iPhone’s Disruptive Potential: Steve Jobs on Apple’s Vision and Controversies

The launch of Apple’s iPhone in 2007 was more than just another product release it was a decisive moment in technology history, according to then-CEO Steve Jobs. Jobs’ insights into the market dynamics and Apple’s motivations for entering the smartphone sector reveal the company’s transformative vision. In the backdrop, despite concerns about Apple’s stock options backdating controversy, Jobs remained optimistic about the future of both the company and the iPhone. Industry analysts echo that sentiment, foreseeing a potential surge in Apple’s earnings per share due to the iPhone’s expected success.

From Apple Computers to Apple Inc: A Strategic Shift

Apple Inc.’s transformation began with a name change, signifying a broader scope than just computers. With this rebranding came new products, notably the iPhone. The unveiling led to an 8% jump in Apple’s stock, although the company also grappled with the stock options backdating scandal. Despite these challenges, the name change and product launch were indicative of Apple’s evolution into a diversified technology giant.

iPhone: Not Just Another Smartphone

According to Jobs, the iPhone was designed to be a game-changing product that could redefine the smartphone industry, similar to how the Macintosh disrupted computing in 1984 and the iPod transformed music in 2001. “The sector is highly competitive but is in dire need of innovation,” Jobs said. His motivation for Apple’s entry into this market was rooted in personal frustration with existing handsets and a belief that the sector required a complete overhaul.

Apple’s Focus on Innovation Over Competition

While acknowledging competitive brands like Palm, RIM, Nokia, and Motorola, Jobs highlighted that Apple’s focus wasn’t on outdoing rivals but on creating groundbreaking products. “We are not thinking in competitive terms. The emphasis is on creating something revolutionary,” Jobs stated, expecting that Apple’s innovation would naturally give it a distinct market position.

Financial and Market Implications

The iPhone was anticipated to be a “home run” for Apple, potentially adding significant earnings per share. Analysts speculated that the phone could add around $0.25 per share, and with higher performance, possibly up to $0.75. Despite the stock options scandal, the overall consensus was that the iPhone’s market success would overshadow any negative impact from the controversy. Apple’s brand power and customer loyalty were expected to counterbalance the generally falling average selling prices in the cell phone market.

Media and Market Reach

The video feature in iPods turned out to be a huge success, providing an optimistic precedent for the iPhone. Over 50 million TV episodes and 1.3 million feature films were sold via iTunes in a short period. Jobs believed that the iPhone’s initial high price would eventually decline, making the device accessible to a broader audience over time.

Controversies and Legal Matters

Jobs addressed the stock options backdating controversy directly. An internal investigation led by an independent former federal prosecutor found that no current management was involved in any misconduct. These findings were submitted to the SEC for further scrutiny. Despite this, Jobs admitted some level of responsibility as the CEO but was confident that it would not affect the management team.

Tenure and Future Vision

Regarding his future at Apple, Jobs expressed a willingness to serve “at the pleasure of the board and the shareholders.” He displayed optimism about overcoming the ongoing legal matters and reaffirmed his commitment to Apple.

Conclusion

Steve Jobs articulated a compelling vision for the iPhone, positioning it as a groundbreaking device poised to redefine the smartphone industry. The expectation was that, much like the Macintosh and iPod before it, the iPhone would be a game-changer, a sentiment widely echoed by industry analysts. Though not without its controversies and challenges, Apple’s calculated entry into the highly competitive smartphone market appeared to be a strategic move aimed not just at market penetration but at setting a new trajectory for the entire industry.

Notes by: professor_practice


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