Steve Jobs Would've Hated Apple's Current iPhone Strategy

The growth of Google's Android has made iOS a niche platform in emerging markets. That wouldn't have sat well with Steve Jobs.

Feb 5, 2014 at 9:30AM

To defend its margins, Apple (NASDAQ:AAPL) has refused to release a low-cost iPhone. Google's (NASDAQ:GOOGL) hardware partners, meanwhile, have had no such qualms, offering Android-powered handsets for as little as $100.

But Apple's margins have come at a cost: market share. While the iPhone remains dominant in some developed economies like the U.S. and Japan, its global market share has dwindled, down to less than 13%. Meanwhile, Google's Android has exploded in popularity, and it now accounts for more than 80% of smartphones sold worldwide.

While Apple's founder Steve Jobs is often quoted as having compared his company to BMW, he understood the nature of market share -- and why it's so important when you're running a platform business.

Jobs on profits and market share
While reading the following Jobs' quote, try to guess which product he's discussing:

They cared about making a lot of money... they had this wonderful thing... they got very greedy, and instead of following the original trajectory of the original vision which was to make this thing an appliance and get this out there to as many people as possible, they went for profits. And they made outlandish profits for about four years. One of the most profitable companies in America for four years. And what that cost them, was their future. Because what they should've been doing is making rational profits, and going for market share... would've had a 33% market share right now, maybe even higher... now it's got a single-digit market share and falling. And there's no way to ever get that moment in time back... [it] will die, in another few years.

The year was 1995, and Jobs was talking about the Macintosh. But his quote could just as easily be applied to the iPhone. Sure, the iPhone still has double-digit market share, and probably won't die anytime soon, but Jobs clearly understood the forces that come into play when a platform's market share begins to dwindle.

Companies tend to have long glide slopes, because of the installed base. But Apple's just gliding down its glide slope, and they're losing market share every year... things start to spiral once you get under a certain threshold, developers no longer write applications for your computer.

A Google fanboy? No -- once again, Steve Jobs on the Mac.

Why market share matters
While there are numerous reasons customers may choose Apple's iPhone over a competing Android handset, one of the biggest remains Apple's app advantage. While Google Play eventually gets most of the major mobile apps, developers in the U.S. continue to favor Apple's platform.

Case-in-point: Facebook Paper, the social network's new mobile app that's received rave reviews (in fact, some believe it's better than Facebook's normal app). If you want to use it, you'd better own an iPhone, otherwise you're out of luck: There's no Android version available.

Facebook obviously has the resources to release Paper for Google's platform if it wanted to, and in time, I'm sure it will. But since Paper remains exclusive to the U.S., and Apple's iPhone dominates the U.S., going iPhone-first is the obvious choice.

But it wouldn't be if Facebook Paper was aimed at the Chinese market, or just about any country in Europe or Asia, where Google's Android is the favored platform. When Facebook decides to release Paper internationally, I'm sure it will be in the form of an Android version.

Apple needs a low-cost phone to compete in emerging markets
Apple is looking to the emerging markets for growth, but if it doesn't release a cheaper iPhone, it may not get it. Low-cost Android handsets have allowed Google's mobile operating system to conquer emerging markets, with Asian developers increasingly favoring Android.

I can't say for certain Jobs would've endorsed offering a cheaper iPhone (he famously resisted the netbook trend) but the iPhone's dwindling market share wouldn't have sat well with him. Although he kept the Mac a niche item during his second stint at the company, Apple's resurgence was built on the back of market-dominating products: the iPod was, for most of its life, the top-selling mp3 player, while the iPhone, at the times of Jobs' passing, had almost one-third of the market.

Jobs understood the perils of dwindling market share; the same can't be said for Apple's current management.

A better investment than Apple? Get our top stock pick for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers