Businessweek (Ive, Cook, Federighi, cover)

Last time an Apple executive gave a detailed interview to Bloomberg Businessweek was in December 2012, when CEO Tim Cook talked Scott Forstall, collaboration and management changes.

Following last week’s iPhone 5s and iPhone 5c introduction and yesterday’s release of iOS 7, the most significant visual change to Apple’s mobile operating system since the original iPhone, the publication interviewed Cook and his lieutenants, design guru Jony Ive (who designed iOS 7) and software head honcho Craig Federighi.

In a wide-ranging interview, the three men discussed iOS 7, collaboration, competition, Android, the so-called cheap iPhone and other topics.

I’ve included the best quotes right below…

Sam Grobart interviewed Cook, Ive and Federighi for this week’s Bloomberg Businessweek cover story.

For starters, the new management structure is in place at Apple to foster tight collaboration between the design, hardware and software teams, which is crucial to Apple’s famous vertical integration.

Ive and Federighi will spend 10 minutes talking about how hard they worked to perfect iOS 7’s blurred-background effect. “I think, very often, you can’t call out by attribute or name areas of value,” says Ive regarding what people look for when using a product. “But I do think that we sense when somebody has cared.

And one thing that is incontrovertible is how much we’ve cared.”

Here’s a quick video recap of the interview.

I like that Ive sits only a minute away from Craig Federighi, Apple’s SVP of Software Engineering.

Of the iPhone 5s Touch ID fingerprint scanner, Ive says:

There are so many problems that had to be solved to enable one big idea.” Without mentioning competitors (Samsung), it’s clear the two executives think some of what passes for innovation is illusory at best. “We didn’t start opportunistically with 10 bits of technology that we could try to find a use for to add to our features list,” Ive says.

As you could imagine, the executives couldn’t avoid the inevitable question of Android competition. Cook (aka the numbers guy) pointed one survey giving iOS devices a 55 percent share of all mobile web activity to re-iterrate his claim that a lot of people buy Android devices, but the ones they actually use have an Apple logo on the back.

Quoting an IBM survey which says the iPad accounted for more than 88 percent of online shopping traffic from tablets during last Black Friday, Cook said:

For us, it matters that people use our products. We really want to enrich people’s lives, and you can’t enrich somebody’s life if the product is in the drawer.

On fragmentation:

A recent survey of smartphones sold by AT&T showed 25 Android handsets; six did not have the latest operating system.

“And so by the time they exit, they’re using an operating system that’s three or four years old. That would be like me right now having in my pocket iOS 3. I can’t imagine it.”

Indeed, analytics company Mixpanel today found that nearly one-third of iOS users upgraded to iOS 7 in the first 16 hours.

Mixpanel (iOS 7 adoption, first 16 hours)

Due to Google’s fragmentation problem, Android operating systems are “not the latest ones by the time people buy,” Cook said. It’s a “compounding problem,” he aded:

It will show up in developers. It will show up for people that no longer have access to certain apps. It will show up in security issues because if you’re not moving your customer base to the latest version, then you have to go back and plug holes in all of this old stuff, and people don’t really do that to a great degree.

That’s all good, but what about Nokia?

“I think Nokia is a reminder to everyone in business that you have to keep innovating and that to not innovate is to die,” said the CEO.

As for the ‘Apple is doomed’ meme, Cook isn’t rattled by any of this.

Businessweek (Ive, Cook, Federighi, image 001)

Likewise, he doesn’t lose sleep over the 33 percent decline in Apple stock since its peak about a year ago:

I don’t feel euphoric on the up, and I don’t slit my wrists when it goes down. I have ridden the roller coaster too many times for that.

Challenged on the topic of competition from vendors of cheap gadgets, Cook responded:

It happens in every market I’ve seen. It happens in all consumer electronics, from cameras to PCs to tablets to phones to—in the old world—VCRs and DVDs. I can’t think of a single consumer electronics market it doesn’t happen in.

So Tim, what about the supposedly cheap iPhone 5c that’s not really cheap at all when sold off-contrac?

We never had an objective to sell a low-cost phone. Our primary objective is to sell a great phone and provide a great experience, and we figured out a way to do it at a lower cost.

He’s actually right – the cheap iPhone has been analysts’ short-sighted pipe dream for years now.

“There’s always a large junk part of the market,” Cook said. “We’re not in the junk business.”

Fortunately, both of these markets are so big, and there’s so many people that care and want a great experience from their phone or tablet, that Apple can have a really good business.

There you have it.

iOS 7 teaser (iPhone 5c ad 006)

As you know, the iPhone 5c is simply last year’s iPhone with improved LTE support, sold for a $100 less unsubsidized.

That’s actually consistent with Apple’s strategy, it’s just that this time around last year’s iPhone happens to have a new polycarbonate plastic enclosure which comes in five color variants.

http://www.youtube.com/watch?v=cO3rsfE7GM0

Ive and Federighi dismiss the notion that Apple has lost its innovation.

The line against Apple is that its pace of innovation is off, but Ive and Federighi dismiss that. The two are keen to point out not just new features, but also the deep layers of integration that went into each one.

Of the 5S’s fingerprint scanner, Ive says, “there are so many problems that had to be solved to enable one big idea.” Without mentioning competitors (Samsung), it’s clear the two executives think some of what passes for innovation is illusory at best.

“We didn’t start opportunistically with 10 bits of technology that we could try to find a use for to add to our features list,” Ive says.

Federighi jumps in: “New? New is easy. Right is hard.”

I urge you to check out the entire interview (or save it for later), it’s a well-worth read with a whole bunch of other interesting tidbits I haven’t even mentioned here.