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Apple's chief hints at new products -- iWatch, smart TV -- plus talks taxes, Lisa Jackson hiring, and lawsuits

At D11 Conference (the eleventh annual All Things D press event), Apple, Inc. (AAPL) chief executive Tim Cook delivered an interesting keynote interview.

I. Tim Cook Isn't Jealous of Android -- or so he Says

The interview comes at an interesting time.  Apple is continuing to struggle in China; its profit margins have slid for the first time in years; and its share prices hover at a relatively "low" (in Apple terms) $440 USD, having briefly dipped below $400 USD.  Meanwhile, Android rivals' devices are selling well -- in the month after its launch HTC Corp. (TPE:2498) has moved 5 million "One" smartphones, while Samsung Electronics Comp., Ltd. (KSC:005930shipped over 10 million Galaxy S IV handsets in the first month on the market.

But Tim Cook claims he isn't concerned about Android outselling iPhones in unit sales.  He remarks, "Is Apple in trouble? Absolutely not. Let's zoom out and let me give you my perspective on it. We're a product company, so we think about products.... For us, winning has never been about having the most. Arguably, we make the best PC, but we don't make the most."


He points to strong sales figures (even if those figures show slowing growth), but is especially ardent about usage, commenting, "More important than the numbers -- customers love them. The usage of these products is unbelievable. The latest NetApp numbers look at usage, and I follow these closely. Usage worldwide, smartphones and tablets, from web traffic -- 59 percent is from iOS. Worldwide!  I look at that, and I feel pretty good. We had an unprecedented number of new products last year."


Tim Cook is enthusiastic about new products like the iPad Mini, even if profit margins and growth have slid a bit.

Those "new products" include the iPad Mini (launched in Nov. 2012), the fourth generation iPad (also Nov. 2012); a third generation Apple TV (Mar. 2012); new iPod Touch/Nano (Sept. 2012); refreshed Mac computers including the Retina MacBook Pros; and, of course, the iPhone 5 (Sept. 2012).

II. "Game-Changer" New Apple Products Company

And Mr. Cook says new products are on the way, enthusing, "We're still that company. We have some incredible plans that we've been working on for a while. We have some incredible ideas. The same culture, and largely the same people that delivered the iPhone and iPad, are still there. The culture is all still there, and many of the people are there. I think we have several more game-changers in us."

What are those "game-changers"?

One will almost certainly be a "smart TV".  Tim Cook announced that Apple TV -- once a "hobby" product of late Apple CEO Steven P. Jobs -- had crossed the 13 million unit threshold, thanks to strong sales of around 7 million units in 2012.  That contrasts favorably to some of Apple's chief set-top box competition like Roku, which has moved a mere 5 million units to date [source].  All that success, he adds, is without any major effort in terms of publicity -- "We aren't marketing it," he states.

But Tim Cook is still greedily eyeing the smart TV -- a flat panel set with a built-in smartphone-like operating system (which provides internet browsing, media playing, and gaming without a set-top box).  He comments, "We think a lot about the TV experience can be better. We answered some of those, not all of those, with the Apple TV, and we're still working on that."

AppleTV
Apple is likely looking to eventually transplant the "guts" of Apple TV directly
into a Smart TV set. [Image Source: Engadget]

In other words, Apple is likely working on a smart TV and/or television geared services, but is still struggling to perfect them.

The CEO also hinted at an upcoming wearable product -- the smart watch.  Discussing the appeal of Google Inc.'s (GOOG) Glass Explorer wearable Android device, he argues, "It's tough to see this having a broad-range appeal. But, I think wearables are incredibly interesting. I think it could be a profound area for technology.  I wear glasses because I have to. I can't see without them. People generally want glasses to reflect their fashion, their style and so forth. From a mainstream point of view, this is difficult."

Interviewer Walt Mossberg (of All Things D and The Wall Street Journal) smartly asked, "But, the wrist is not?"

To which Mr. Cook replied, "I think the wrist is natural."

Apple won't be alone; Samsung is also working on a smart watch, as is Microsoft  Corp. (MSFT).  But it sounds like we could see an Apple wristwatch product this year (another clue lies in the iPod Nano which reversed its shift to a smaller wrist-watch wearable form, returning to a larger touch-screen late last year).  
 

A fan-made mockup of the Apple iWatch [Image Source: Lunatic]
 
Tim Cook suggests that sensors will play a key role in the upcoming product, enthusing about his NIKE, Inc. (NKE) Fuel Band.  Thus it sounds like Apple's wristwatch product will likely have some sort of built in functionality for athletics (think run tracking) and perhaps proximity aware sensing (similar to the Galaxy S IV; hold up wrist watch near face to give voice-commands or perhaps even cellular calls).

III. Major Overhaul to iOS Confirmed

On the operating system front, Tim Cook confirms that major updates to OS X and iOS will be rolled out in time for the 2013 Worldwide Developer Conference (WWDC), which runs June 10-14 in San Francisco, Calif.

While he did not specifically confirm the widespread rumor that iOS 7 will imitate Microsoft's Windows Phone/Windows 8's "flat" look, he did confirm part of the rumor -- that Jony Ive (who designed the original iPhone body) is hard at work perfecting the major update to iOS.

iOS 7 flat
An artist mockup of what iOS 7 might look like [Image Source: YouTube/Simply Zesty]

He comments, "Jony Ive has been really key [to this version.]"

He also indicates that his company is hard at work trying to repair one of its major misses -- Maps.  He says, "I think it's very important. Mapping is complex, and not just the underlying data of the map, but things like POIs and the other pieces around it. We have an enormous investment in Maps. We've made many, many improvements over the last several months, including a very significant change in Japan. We think location is very important.  [The product is] greatly improved, but not there yet. We're putting a lot of bright people on it. We screwed up there."

The executive shot down the rumor that Apple had made a bid for turn-by-turn directions company Waze.  Waze is a popular Israeli startup who has its own maps, based on a crowd-sourced approach.  The company has popular apps on Android and iOS and is particularly good at giving directions in that it "sees" traffic backups and suggests alternate routes thanks to its crowd-sourced strategy.

Google and Facebook.com, Inc. (FB) are rumored to be in contention for the app.

More surprisingly Mr. Cook suggests that Apple may eventually go -- to an extent -- the route of Google, opening up some of its base APIs.  He comments, "Of course -- on the area of APIs, I think you'll see us open up more in the future. But, not to the degree that we put the customer at risk of having a bad experience.  Will we open up more? Yes."

IV. Lawsuits and Taxes
 
Tim Cook also addressed three of the key controversies facing his company -- environmental compliance, taxes, and lawsuits (against) Android.
 
On the topic of lawsuits, Mr. Cook defends Apple's decision to sue Samsung commenting, "The pluses for the broader industry, is that I think we're running the standards-essential issue largely to ground. There were several companies trying to get injunctions for standards-essential patents. When Google sued us, and Samsung sued us with standards-essentials injunctions on our products -- largely, the world has said that this isn't right, and that it's an abuse. Not just for Apple."

Apple v. Samsung
Apple's CEO says he doesn't like to sue people.  [Image Source: Gizmodo]

Apple struck first against Samsung and HTC.  In the case of Google subsidiary Motorola, it was Motorola who struck the first blow and Apple who countersued in cases that were eventually tossed from court with prejudice not once, not twicebut three times.

When pushed by The Verge's editor Nilay Patel, who said, "But you sued Samsung first, and you just added the Galaxy S4..."

Mr. Cook continued to dodge the question of his company's ongoing legal war with Samsung, equivocating, "Generally, I don't like lawsuits any more than I did last year. But, I don't want copying. It's a values thing. This is about values at the end of the day."

It's important to remind readers that Apple has made a licensing truce with HTC -- its aggression towards Samsung appears to be largely from a competitive standpoint.

On the topic of taxes he continues to deny accusations of tax dodging, remarking:

For multi-nationals, the right approach is simplicity. Just gut the code -- it's 7,500 pages long. None of us can read it. Apple's tax return is two feet high! It's absolutely crazy. Let's throw away the expenditures, and let's set a reasonable tax to bring offshore profits back to the US. It helps the US economy.

Our effective tax rates is 30.5%. We pay $6 billion -- that's more than anyone in the U.S.! We aren't in there saying we should pay less -- in fact, we may end up paying more with our approach. But we'd have unlimited ability to pull our money back to the U.S.

I've seen something where people think we have a special deal with the Irish government where we get a two percent flat tax rate. We don't have that. Let me just set that aside.

The basic thing that's being debated -- for a company like Apple that sells things across the world, and develops them in the United States, some people believe that all of the profits around the world should accrue to the U.S. and be taxed in the U.S.

If everything developed in the United States is going to be taxed here, I worry about where development will be. We're now in a situation where we don't always have to make decisions based on financial implications. But for other companies that do? This wouldn't be good for jobs in the United States. I want people to think through the logical next steps [in Congress].

I think when you get a little larger, you get more attention. It comes with the territory.

Indeed other large companies like Google and Microsoft have come under scrutiny in the U.S. and European Union over similar tax dodging accusations.  

Apple money
Apple says it isn't dodging taxes.  [Image Source: SomanyMP3s]

Tim Cook's support of a flat tax is one shared by many Americans, but Washington D.C. politicians remain largely opposed to the idea, preferring the current convoluted system that allows them to sneak tax loopholes into legislation, which in turn earns them special interest dollars to win elections.

Lastly on the topic of "green" technology, Tim Cook thumped his company's track record, boasting, "Take the environment. We've been focused on that for a long time. We've eliminated toxins from all of our products. We're running our data centers with 100 percent renewable energy. We own the largest solar farm of any non-utility company (in North Carolina). We try to leave the environment better than we found it."

He reveals that his company just hired former U.S. Environmental Protections Agency (EPA) chief Lisa Jackson to help with Apple's compliance efforts.

Lisa Jackson
Former Obama admin. EPA chief Lisa Jackson is joining Apple. [Image Source: Reuters]

He explains, "Lisa Jackson is joining Apple. She recently left the EPA, and she'll now be coordinating these efforts across the company.  She'll report to me. I like her a lot, and she's a chemical engineer by background.  I actually forget the actual title, but she'll continue to coordinate our environmental efforts across Apple."

Lastly, on the topic of Apple's cash pile, which is expected to hit $170B USD this year, Tim Cook insists his company isn't hoarding cash.  In addition to its new dividend and share repurchasing programs, he reveals that in 2012 Apple acquired nine firms, up from its yearly average of six.

He would not disclose what those firms were (other than the publicly known ones) for competitive reasons.

Source: All Things D



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RE: Why such a big deal?
By Tony Swash on 5/29/2013 3:53:37 PM , Rating: -1
quote:
quote:
By that logic they wouldn't sell any Mac's, yet their Mac sales are always increasing, unlike PC sales.

They ARE PC's now though. Some of their stuff is being called the best Windows PC's out there. Ironic right?

If Mac's could still only run OSX, the sales wouldn't be close to what they are today.

quote:
Who would care with Android over selling?

Anyone in competition with them maybe? Of course Apple "cares" their being outsold, only an idiot would run a business and not "care" their being outsold. Apple's goal, as is any companies, is to claim as close to 100% of the market as possible.

Tim Cook claiming he doesn't "care" is nothing but saber rattling and chest thumping. He's trying to spin declining stocks, declining market presence, and investor uncertainty into positives by claiming great stuff is right around the corner.

quote:
When you have generic phones/devices from god knows where, that cost next to nothing, who wants to compete with that? No one wants a race to the bottom.

Yeah that mentality worked out great for RIM. "We're awesome, we don't have to compete. Our products speak for themselves!"

Do me a favor and please tell me you aren't running a business right now.


Translation: Please, please, make Apple go away, if I pretend they are going away perhaps it will come true.

I liked this:

http://techpinions.com/androids-market-share-is-li...

A few of the quiz questions from the article.

Quiz #1: Market Share Alone

Question: Company A has 25% market share. Company Z has 75% market share. Which company is doing better?

Answer: With market share alone, there’s simply no way to know or tell. Company A might be bringing in all the profits and company Z might be going bankrupt.

Quiz #2: Market Share or Profit Share

Question: Company A has 25% market share and 75% profit share. Company Z has 75% market share and 25% profit share. Which company is doing better?

Answer: If you said anything other than company A, then you are dumber than a doorknob. Any intelligent person would take company A’s profit share over that of company Z’s market share.

Quiz #3: Less Market Share Can Be Better Than More

Question: Company A has 25% market share and 50% profit share. Company Z has 75% market share and 50% profit share. Which company is doing better?

Answer : Anyone with any business sense would say company A.


RE: Why such a big deal?
By Reclaimer77 on 5/29/2013 4:15:38 PM , Rating: 2
First off I don't want Apple to "go away", stop taking this stuff personal.

Secondly, your point is idiotic. You're trying to make a schism between profits and marketshare where none such exists.

I want my company to have the biggest marketshare AND have the most profits. If I allow my company's marketshare to dip near 10%, I've become a niche company. Sure, I'm still profitable, today, however what this means is future growth and expansion is going to be that much harder. Maybe even impossible.

So yes, today, Apple is extremely profitable. However this is still a growing market, and claiming they "don't care" about marketshare is just hype. Anyone with business sense knows this.

I'll say one thing, Steve Jobs sure as shit cared about marketshare. I don't think watching Android capture 70%+ of the global market is what he had in mind for his thermonuclear war.


RE: Why such a big deal?
By retrospooty on 5/29/2013 6:26:13 PM , Rating: 3
Exactly... If Apple didn't care about market share they wouldn't have started copying so many of Androids features after Android started outselling IOS.


RE: Why such a big deal?
By Tony Swash on 5/29/13, Rating: -1
RE: Why such a big deal?
By Reclaimer77 on 5/29/2013 6:55:39 PM , Rating: 2
Umm why did you cut off half my quote?

And your post roughly translates into "market share isn't important because Apple isn't leading in it"

Why do I have the feeling if they were you guys would be extolling the virtues of it?


RE: Why such a big deal?
By retrospooty on 5/29/2013 7:30:03 PM , Rating: 3
Because profit wasn't important until Apple was making it. Likewise 4g, larger screen, and many other thongs thatApple caught up on... Because they are only here on behalf of a company, not for any tech or open minded debate


RE: Why such a big deal?
By retrospooty on 5/29/2013 7:30:37 PM , Rating: 2
Because profit wasn't important until Apple was making it. Likewise 4g, larger screen, and many other things thatApple caught up on... Because they are only here on behalf of a company, not for any tech or open minded debate


RE: Why such a big deal?
By Reclaimer77 on 5/29/2013 8:52:00 PM , Rating: 2
Confession:

I didn't actually read Tony's entire post. Not even a third of it. Because it's the same goddamn thing he says every time.

It's like he doesn't even realize Google doesn't make their money directly from handset sales. Their not a handset maker! Google's entire strategy IS market share, because the more people using Android and Google's baked-in services, the more Google profits.


RE: Why such a big deal?
By retrospooty on 5/29/2013 10:59:53 PM , Rating: 2
LOL... Yup. Its hard to get through a useless post that you already know is designed to distort the truth to make a company look better. I keep reading for comic value alone... Its not like he will ever say anything different, or do anything but take Apples side no matter what the issue being discussed. Its exactly like listening to a highly partisaned politician. After a few sentences you just start to feel like an idiot for bothering to read it.


RE: Why such a big deal?
By Tony Swash on 5/30/13, Rating: 0
RE: Why such a big deal?
By testerguy on 5/30/2013 8:14:10 AM , Rating: 2
And also - Google services are all available on iOS too so whether or not the user is on Android or not is irrelevant.


RE: Why such a big deal?
By testerguy on 5/30/13, Rating: 0
RE: Why such a big deal?
By retrospooty on 5/30/2013 1:00:45 PM , Rating: 2
I never said anything against Apples business model. Clearly its profitable and I have mentioned this before... I don't hate Apple. I hate some of the moves they make and BS responses like "your holding it wrong" and the hippocritical Thermonuclear war thing. I hate loser asses on the internet that feel the need to defend every step any company takes and every product they make. Especially when they skew the whole truth like Tony does on a regular basis. I just don't get the "defend my favorite company" thing, and I post counter to it. I am pretty sure reclaimer hates Apple LOL.


RE: Why such a big deal?
By Cheesew1z69 on 5/30/2013 1:11:55 PM , Rating: 2
quote:
so occasionally he takes his clear love of the company too far.
Oh the irony...


RE: Why such a big deal?
By Fleeb on 5/29/2013 6:59:50 PM , Rating: 2
But why would they want to create cheaper iPhones for the Chinese "market" if it is not about market share?


RE: Why such a big deal?
By ven1ger on 5/29/2013 7:17:19 PM , Rating: 2
Apple has to have new markets to push their devices into, and the Asian market is probably the largest market that is currently available that has a high disposable income available that it didn't have before. Only thing is that Apple has to compete with a lot of cheaper devices because they are no longer top dog, and with the Asian market, they like flashy but they also want inexpensive. Apple will still be able to entertain high margins in the Asian market, but Android devices will dominate because it will have lower prices for similar hardware features.

With Apple deciding to cast loose Samsung, this is going to be difficult for Apple to try to make the devices cheaper and rebuild their supply chain. It looks better for Samsung because they can make the devices a lot cheaper than Apple can since they make it themselves so, Apple cannot undercut Samsung prices, though Samsung can lower their prices easily, if needed.


RE: Why such a big deal?
By Reclaimer77 on 5/29/2013 9:00:00 PM , Rating: 1
quote:
Only thing is that Apple has to compete with a lot of cheaper devices because they are no longer top dog, and with the Asian market, they like flashy but they also want inexpensive.


Asians aren't idiots, that's why.

Apple has cultivated a rock star social movement in America. You're not just buying a product, it's apparently a lifestyle. And they've done this by largely treating their consumers like idiots, and it's worked. Americans today are more dumb and complacent than at any point in history. They're comforted by Apple's "just works" dumbed-down overly-simplistic condescending way of doing things. Of all the things Apple might ask you to do, using your brain sure isn't one of them.

The famous Steve Jobs quote that "people don't know what they want until you tell them", that one? Yeeeah that kind of pretentious condescending bullcrap wouldn't tread much water in any Asian market.


RE: Why such a big deal?
By ven1ger on 5/29/2013 9:28:57 PM , Rating: 2
No, there are Asian fools, but I think the difference between Asian and Western buyers is more that most Asians, have to work a lot harder than the average American. Most Asians have to work long hours for a lot lower pay than the average American makes. Asians like their toys but they are not just going to rush and buy the most expensive product they can find, if they can find it cheaper and can do most things the other can do, they'll go with the cheaper alternative, and be darned if it isn't the coolest gadget that someone else paid a lot more for. It's also part of the culture that Asians will use the device they paid for until it breaks and not upgrading every time a new version comes out, if it works why change it...


RE: Why such a big deal?
By TakinYourPoints on 5/30/2013 2:45:25 AM , Rating: 2
You have obviously never been to Korea, Taiwan, or Japan. If you thought Americans were materialistic or image-conscious then think twice, we have nothing on them.


RE: Why such a big deal?
By testerguy on 5/30/2013 8:17:13 AM , Rating: 2
Well you didn't seriously expect such a backwards texas-style conservative to be cultured, did you?

He'll just armchair-judge the rest of the world, thank you very much.


RE: Why such a big deal?
By BRB29 on 5/30/2013 9:29:26 AM , Rating: 2
I've seen Korea, Japan, China, Vietnam, Cambodia, Thailand and the Phillipines. Seriously, the most materialistic people are still black people in the US. Asians just right behind them.


RE: Why such a big deal?
By Reclaimer77 on 5/30/2013 2:33:34 PM , Rating: 2
Racist! :)


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