Tim Cook Doesn't Care if Android is Beating iOS in Sales
May 29, 2013 12:30 PM
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Apple's chief hints at new products -- iWatch, smart TV -- plus talks taxes, Lisa Jackson hiring, and lawsuits
(the eleventh annual
All Things D
press event), Apple, Inc. (
) 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
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. (
moved 5 million
, while Samsung Electronics Comp., Ltd. (
shipped 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
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
(Sept. 2012); refreshed Mac computers
including the Retina MacBook Pros
; and, of course,
the iPhone 5
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 [
]. 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."
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
the smart watch
. Discussing the appeal of Google Inc.'s (
) 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
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
). 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. (
) 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
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.
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 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. (
) 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'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
but three times
When pushed by
'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.
topic of taxes
he continues to
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 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
to help with Apple's compliance efforts.
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.
All Things D
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RE: Why such a big deal?
5/29/2013 4:02:29 PM
Selling 4.1 million Mac's is far from bankruptcy.
RE: Why such a big deal?
5/29/2013 4:38:42 PM
before itunes, they were near bankruptcy until they were saved by MS. A lot of the mac sales are due to the popularity of their mobile eco-system that spills into the desktop area. I don't know if their increased market position is now enough to sustain it in the absence of that eco-system, the PC market is very low-margin and while they are more expensive, their costs are probably much higher too. Since even the highest volume players are having trouble making a profit, it's debatable if, on its own, their desktop unit would be profitable.
but that's besides the point, the main thing is that their market price is determined on expectations of multi-billion dollar quarterly profits, and that's the danger zone for Apple. With a diminishing market share in a market that's trending towards commoditizing, they will be in big trouble.
then again, I'm sure their very aware of the dangers, but what they are going to say ... Truth is, they need a new mass-market line in the next 2-3 years, or else the current market price will plummet, especially with the massive cash depletion. Wouldn't be surprised if cook is out of the job in 2 years to be honest.
RE: Why such a big deal?
5/30/2013 9:13:51 AM
The OP needs to read some history. Apple have never had a monopoly because they were never a thriving business like Microsoft then was. Their high end was actually a niche, a slice of the market under-served by competitors. If they had the means of establishing market dominance, only a crazy person would have passed that over. Steve Jobs was many things, but he wasn't quite that crazy.
Their success was to switch to portable products. The iPod drove them forward into something other than a PC Company, and they managed to leapfrog everyone else on the planet in getting out a good, attractive and everyday useful smartphone (followed later by the iPad). I don't begrudge them a well deserved cash reserve.
Apple's current problem is that they are still clinging to their niche mentality. They release one smartphone model each year. It serves a particular part of the market. The rest of the market who want something different swarm to Samsung, HTC, etc. who release multiple differentiated models from high end phones to cheap bricks. Apple could have done this years ago, as they eventually did with iPods. They're paying for it now by suffering a major competitor in a market they should have completely dominated in.
This is the outcome of greed. Apple allowed short term monopolistic like profits to blind them to the importance of diversifying their product. It still is blinding them (though stock drops have a way of encouraging better vision). You'll see Apple stock bounce nicely if those cheaper iPhone rumours are confirmed.
RE: Why such a big deal?
5/30/2013 9:27:19 AM
You have no idea what you are talking about.
Apple machines/devices have always been priced at a premium(meaning high end). They had significant market share in the 80s too. They eventually lost market share to Windows because PCs with windows was cheaper.
Apple machines still sold at a premium but they just had very small market share. That is until Steve Jobs came back.
Since he came back, they dominated the media player market with ipods. Then vastly improved their macbrooks and desktops. Eventually, they owned over 80% of high end market while not releasing anything for the mid and low end market. Notice that with all their products?
See the trend?
They did that with iphones and ipads as well. Even if their product was not competitive, they will still sell it at a premium and would rather dump it then discount it. Have you not notice that retailers are not allowed to give discounts on apple products?
You can draw whatever delusional conclusions in your head but their business model is premium products or superior goods in business terms. Steve Jobs had said that several times.
RE: Why such a big deal?
5/30/2013 11:23:06 PM
I do agree with what you said. I think if Apple has taken the steps to kill Android back in 2001 with cheaper priced models, while they hold the absolute brand image in smartphones, Android would not have gaining such a huge market share as of now. Those Apple defenders are dazzled by the huge cash reserve of Apple, and the current reported profit from sales. But they are ignoring the fact that Apple profit is driven by new sales, they are not a company such as Microsoft or Oracle that the customers are locked in and cannot switch away from their services in a hurry. Now consider what is the incremental improvement from iPhone 4s to iPhone 5, for example, is there enough improvement there for someone already own a iPhone 4s to do a repeat purchase and get the iPhone 5? The smartphone market is already quite saturated that many already own such a device, and new sales are likely to be come from existing customers. If the customers decide the new model is not worth a new purchase, Apple would have lost a sales. Their business model of relying on unit sales will suffer when the newer model failed to attract old customers so the current huge profit in sales might disappear quickly even from their existing loyal customer base. Their premium prices will not work that well in new emerging market such as in Asia. Apple does have good reasons to worry about their future. History has shown dominant players in mobile space can be quickly taken down in a few years before, which can also happen to Apple if they are not careful.
RE: Why such a big deal?
6/1/2013 10:42:53 AM
How could they have killed android in 2001?
RE: Why such a big deal?
5/30/2013 12:53:05 PM
But it's a mere pittance compared to almost all other PC vendors.
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