Sep 8, 2022 - Technology

Jobs and Cook disagreed over how to sell the iPhone

Kara Swisher, Jony Ive, Laurene Powell Jobs, and Apple CEO Tim Cook speak onstage during  Code Conference
Kara Swisher, Jony Ive, Laurene Powell Jobs and Tim Cook speak onstage during Vox Media's 2022 Code Conference. Photo: Getty Images for Vox Media

Apple's past and current CEOs, Steve Jobs and Tim Cook, couldn't agree on the best way to sell their most important product, the iPhone, Cook said at a Code Conference panel Wednesday.

Jobs wanted to break with the then-norm in the cellphone industry by having the service providers — carriers like AT&T and Verizon — charge customers full price for the iPhone.

  • Normally these carriers paid manufacturers like Apple a part of the device cost upfront, lowering the price for the customer, because they make their profits via longer-term monthly payments by their users. Jobs aimed to give up that subsidy in order to claim a share of the carrier's monthly revenue, which Apple did for the first iPhone.

Cook, by contrast, preferred the approach Apple eventually switched to: Have Apple take the up-front subsidy and forego the opportunity for a cut of a user's monthly phone bill.

It was a debate that lasted for many years, Cook noted, speaking on a panel at Code Conference on Jobs' legacy, along with longtime designer Jony Ive and Jobs' widow, Laurene Powell Jobs.

Why it matters: The iPhone forever changed the phone business in many ways, reducing the role of carriers in deciding how phones looked and what apps they carried. But the iPhone's growth really took off when the company switched to Cook's preferred approach, the model dominant in the industry.

Between the lines: The industry has tried a number of approaches over the ensuing years. Unsubsidized phones became the norm in much of the world, while subsidies remain important in the U.S.

  • Even in the U.S. subsidies shrunk over the years, especially with the demise of two-year contracts.
  • However they have re-emerged, slightly altered, with the rise of monthly installment payments for phones. Sometimes they are disguised, taking the form not of a lower upfront price for the phone, but instead of a trade-in value that exceeds the resale value of older phones.

The big picture: The anecdote was one of many revealing stories shared Wednesday night on a panel with Cook, Laurene Powell Jobs and longtime Apple designer Jony Ive.

  • The trio also announced the formation of a Steve Jobs archive project that will live online.
  • Cook also discussed other ways that Jobs' legacy lives on at Apple, including the 9am Monday morning meetings where company executives review the status of Apple's key initiatives.
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