OPINION:

I’m afraid I couldn’t just stay silent about AAPL’s unprecedented slide today after reporting record revenue, profits and earnings. After digesting it and reading a number or analyses, some insightful, some idiotic, I believe I’ve discerned a possibility as to what it all means over the long run.

But first, a shout-out to John Gruber over on Daring Fireball for linking to some of the more insightful articles pertinent to Apple’s state as a company. Gruber summed it up when he said: “The paradoxical demands of investors: they want Apple to add a new lower-cost iPhone and think the iPad Mini is too expensive, but, they don’t want Apple’s profit margins to drop. Can’t have it both ways.”

And Gruber also links to his own article from last year reflecting on Steve Jobs’ comments on profit margins versus marketshare. Reflecting on Apple’s mistakes in the ’80s and ’90s, Jobs apparently said, “At the critical juncture in the late ’80s, when they should have gone for market share, they went for profits.” Gruber notes that all in light of the then escalating talk of a soon to be announced 7.9″ iPad mini.

Why am I bringing up all these Gruber-linked articles and quips? Well, because they point the way to what I think is going on with Apple’s stock and what it means for the company going forward. Essentially, Apple’s stock got clobbered last night and today because profits were flat even though revenue was up, meaning, as Apple also reported, that margins were down somewhat. Why are margins down, and what does it mean going forward? While there could be a number of reasons margins were down this past quarter at Apple (and there probably ARE several reasons, there usually is more than one reasons for anything), one significant one going forward is the impact of the iPad mini. While the iPhone is Apple’s biggest cash cow, the iPad is number two and gaining. And I believe that the iPad is the real future of the company (and I think Tim Cook believes the same, as evidenced by his conference call comments about the iPad cannibalizing PC and Mac sales).

On the iPad mini’s influence in Apple’s declining margins, we need look no further than other conference call comments, this time by Apple CFO Peter Oppenheimer. And to put those in perspective, in particular with respect to Apple’s newly less-conservative guidance for the current quarter, we again turn to another Gruber-linked article, this time citing a piece by Mark Rogowsky. Rogowsky deduces that Apple’s guidance for next quarter hints at a drop, year over year, in earnings and suggests that that drop will be due largely to the effect of the lower-priced iPad mini.

I believe that, in his several posts today, Gruber is hinting (and I am outright saying) that Tim Cook and Apple, in its approach to the iPad market, may indeed be following a lesson Steve Jobs himself laid down: go for marketshare over profits when you have to. Unlike the iPhone and the smartphone market, in the iPad, Apple holds the dominant position in the new tablet market. With the introduction of the iPad mini, Apple has extended its reach in that market and appears to be sacrificing some of its traditionally high margins for maintaining or extending that market share lead. I believe that Apple sees the iPad as the future linchpin of the company and does not wish to see a repeat in the tablet market of the 21st century of what it endured at the hands of Microsoft in the personal computer market of the 20th century.

So, to all those “Steve Jobs wouldn’t have done this” critics, I say, “Oh yes he would.” While I have no inside knowledge, of course, I think Steve imbued Tim Cook and Apple with the understanding that while the iPhone is a great money maker in the here and now, the iPad is the true inheritor of the Mac’s mantle of “the computer for the rest of us”. And this time Apple intends to make sure that their vision, their product, dominates the new “post-PC” world.