Since Tim Cook took over at Apple last year shortly before the death of Steve Jobs, not a great deal has been heard from the man at the top. But on Tuesday the new CEO appeared on stage at the Goldman Sachs Technology and Internet Conference in San Francisco to take part in a wide-ranging discussion about the company, its current situation and where it’s heading. The event gave observers an opportunity to get to know the new CEO a little better and find out more about his plans for the tech giant.
Cook took a variety of questions from Goldman Sachs analyst Bill Shope in a talk that lasted around 50 minutes. Here’s a round-up of what he had to say.
On Apple’s supply chain
Apple has faced ongoing criticism for its links with suppliers overseas that many have claimed force their employees to work in sub-standard conditions. Cook was, as you might expect, keen to stress how seriously Apple takes such allegations.
“Our commitment is simple,” he said. “Every worker has the right to a fair and safe work environment, free of discrimination, where they can earn competitive wages and they can voice their concerns freely. Apple’s suppliers must live up to this to do business with Apple.”
Cook said that Apple was checking facilities in the supply chain constantly and fixing problems along the way. The accusations have no doubt been troublesome for the Cupertino company and Cook took the opportunity to try to reassure people that it is doing what it can to iron out the problems. The CEO said the number one priority in this area was to eliminate underage labor in the supply chain, which he said was rare but nevertheless “abhorrent.”
On iPhone growth
Apple sold a whopping 37 million iPhones in its last quarter. “We were pretty happy with that,” Cook said modestly, but what he said next gives us some insight into the company’s determined approach to marketing.
“Let me give you the way I look at the numbers,” Cook told Shope. “As I see it, that 37 million for last quarter represented 24 percent of the smartphone market. There’s three out of four people buying something else. Nine out of ten phone buyers are buying something else.” Cook said the key to increasing its share of the market was to concentrate on making what he says are the world’s best products. “We think if we stay laser-focused on that, and continue to develop the ecosystem around the iPhone, that we have a pretty good opportunity to take advantage of this enormous market,” he said.
On emerging markets
Cook said Apple was focused on being successful in China and Brazil, which he described as “very critical markets.”
He talked about how the iPod introduced Apple to millions more people and helped to push sales of its computers. This happened more in countries like the US, Western Europe, Japan, Australia, Canada, and not in emerging markets. The Apple CEO said that what the iPod did in those countries, the iPhone is now doing in places like Eastern Europe, the Middle East, Africa, China and Latin America – exposing people to the Apple brand. “The world changed for us when the iPhone was launched,” Cook said.
On the iPad’s success
Apple has sold more than 55 million iPads since its launch in 2010, an astonishing number in such a short time. Cook described the device as being “on a trajectory that’s off the charts.”
The reason for its success? Cook was adamant. “It is so large in my view [because] the iPad has stood on the shoulders of everything that came before it. The iTunes Store was already in play, the App Store was already in play. People were trained on iPhone. They already knew about multitouch. Lots of things that became intuitive when you used a tablet, came from before.”
He added: “I gave one to my mother and she knew how to use it from watching the commercial.”
On the iPad and the PC market
Cook claims that from early on the company was confident the iPad would be a big success. “From the first day it shipped, we thought that the tablet market would become larger than the PC market and it was just a matter of the time it took for that to occur.”
Hoping not to destroy too many potential Mac sales, Cook was keen to point out that he thought the PC would be around for a while yet. “That doesn’t mean the PC is going to die,” he said. “I love the Mac and it’s still growing and I believe it can still grow. But I believe that tablet market can replace the unit sales of the PC market, and it’s just a matter of the speed at which that happens.”
On the Kindle Fire
Besides the iPad, Amazon’s recently released $199 Kindle Fire device is the only other tablet to sell in any great number. Cook was bound to have a word or two to say about this.
“Price is rarely the most important thing,” Cook told Shope. “A cheap product might sell some units. Somebody gets it home and they feel great when they pay the money, but then they get it home and use it and the joy is gone.
“Amazon is a different competitor. They have different strengths. They’ll sell a lot of units. They have and they will,” Cook said.
Talking about the future of the tablet market, Cook said “the real catalyst of the tablet market will be innovation and pushing the next frontier.”
On how tablets are damaging the PC market
It won’t come as a great surprise that, as confirmed by Cook, the iPad has cannibalized some Mac sales. However, his view was that as long as the customer stuck with Apple, it didn’t matter if they chose an iPad over a Mac.
“I don’t predict the demise of the PC,” Cook said. “I don’t subscribe to that. Given what we’ve seen, I believe the iPad is cannibalizing some Macs but more PCs. There will be a strong PC industry but tablets will be stronger in units.”
On all that money
It’s no secret that Apple has a shedload of cash at its disposal. Shope accused Apple of using it “very sparingly.”
“I disagree with your use of the word sparingly,” Cook retorted. “We’ve spent billions in the supply chain. We’ve spent billions in acquisition including on IP. We’ve spent billions on retail, the infrastructure of the company, the data centers et cetera…..I would say we’re judicious and deliberate.”
He continued: “We spend our money like it’s our last pennies. I think shareholders want us to do that. They don’t want us to act like we’re rich. We’ve never felt that way. It may sound bizarre but that’s the truth.”
On Apple TV
There’s been much talk of Apple building a TV set, though Cook recently described the project, which includes the company’s existing set-top box, as being at the hobby stage. Here, he elaborated on the subject: “The reason we call it a hobby — we don’t want to send a message to our shareholders that we think the market for it is the size of our other businesses. The Mac, the iPad, the iPod, the iPhone. We don’t want to send a signal that we think the length of that stool is equal to the others. That’s why we call it a hobby.” He added that in this field Apple “need something that could go more main-market for it to be a serious category.”
On iCloud and Siri
Cook described iCloud “not as something with a year or two product life — it’s a strategy for the next decade or more. It’s truly profound.”
As for Siri, “[It’s] still a beta product, but now I feel like I can’t live without it,” Cook said.
On being CEO
Taking over from Steve Jobs, the man who made Apple, was never going to be easy. Shope asked Cook what he might change about the company. Judging from his response, very little.
“Apple is this unique culture and unique company,” he said. “You can’t replicate it. I’m not going to witness or permit the slow undoing of it. I believe in it so deeply.
“Steve grilled in all of us over many years, the company should revolve around great products. We should stay extremely focused on a few things, rather than try to do so many that we did nothing well.”
Cook will be happy with the way things have gone since taking over at the top, with impressive financial figures being reported last month for its most recent quarter. Cook has no time to rest on his laurels though — in the coming weeks, he’ll be launching the next version of the iPad.