Our focus is on making the very best smartphone in the world, and a phone that delivers an off-the-charts user experience that customers want to use every day of their lives. And at the end of the day, I think that carriers--the vast majority of carriers, or even all carriers--want to provide what their customers want to buy, and that's what they're most motivated for. And so the most important thing by far is for Apple to continue making great products that customers want, and we are deeply committed to doing this and are innovating at a rate and pace that's unbelievable in this area.

From the carrier's perspective, I think it's important to remember that the subsidy is not large relative to the sum of the monthly payments across a 24 month contract period. Any delta between iPhone and maybe another phone is an even smaller level of difference. The iPhone has some distinct advantages for the carriers over competing smartphones.

For example, many of the carrier executives have told me that returns from iPhone customers is the lowest of any phone they sell in their whole... in all of the phones they carry. That has a significant direct financial benefit to the carrier.

Also, our engineering teams work extremely hard to be efficient with data, and differently than some others, and we believe that as a result of this, that iPhone has far better data efficiency compared to other smartphones that are using an app-rich ecosystem.