Quick Notes: Tim Cook talks Apple at Goldman Sachs Conference

Bill Shoppe hosts Apple CEO Tim Cook at the Goldman Sachs Technology and the Internet conference. Bold are general question posed by Shoppe, followed by Cooks' general replies.

First question about workers and the supply chain... Cook spoke of how important workers are to the company... talked of education opportunities being offered to workers in the supply chain, over 60-thousand of whom have taken advantage - more than the student body at Arizona State.

Eliminating under-age workers is important. Safety concerns are important (down to fire extinguishers in kitchens). Weekly work-hours are important. Reporting on worker conditions on a monthly basis on their website now. Trumpets work with FLA and audits being undertaken.

Speaking of worker rights and the supply chain, Cook said “We know people have a high expectation of Apple... We have an even higher expectation of ourselves.”

On iPhone (and the law of big numbers):

37-million is a big number... it was a decent quarter... 17-million more than any other number before. 

only 25-percent of smartphone market and only 10-percent of cellphone market... so while the numbers were big, the potential is “jaw dropping.” 

“What we’re focusing on is the same things we’ve always focused on... making the world’s best product.” Keep doing that and they should grab more.

Emerging Market and Pre-paid Market:

How do you address that and make it more affordable?

TC: These markets are critical... everybody wants the best product, not a cheap version of the best product... go-to market in emerging world belongs to retailers, not carriers so go-to market has to be addressed in a different way. Still... product is paramount. 

BTW... We did manage to move Unicom to more of a subsidized market.

How does emerging market translate to Mac?

iPod created halo for Mac. That created resurgence for Mac. But, the halo created by iPod was created in developed markets (US, Western Europe, Canada, Australia, Japan). Not created in emerging markets since people there were already getting music via phones. iPhone created that halo in China, other parts of Asia, South America, etc. iPad adding to that halo as well.

 

2007 (year before iPhone global launch) - revenue form emerging markets = $1.4-Billion

 

2011 - $22-Billion... and that’s just a start.

 

iPad:

 

7 full quarters... 55 million units... what made this such a success and what does it say about the tablet market in general?

 

Took 22 years to sell 55 million Macs... 5 years for iPods... 3 years for iPhones... so this is big. 

 

Great product... app ecosystem has been helpful... stands on shoulders of what came before (App Store was in place... iPhone trained people for it).

 

So what does that mean for where tablets are heading?

 

TC: will eventually be bigger than PCs, just a question of when. Excitement for developing for iS “and that other operating system” is huge versus computers... computers won’t necessarily die, but tablets will outgrow them.

 

Talk iPad competition... (Amazon Kindle Fire)

 

TC: Price is rarely the most important thing... people may buy cheap product... may be happy paying less but but joy is gone with more use. “You don;t always remember you git a good deal! Because you hate it!”

 

Apple able to stay ahead of because they started ahead... while industry was looking to catch up to iPad, Apple was working on iPad 2. Amazon will sell a lot of units, but iPad customers would not be happy with “limited function product.”

 

“I love competition as long as people build their own stuff.”

 

How do you think about cannibalization in Macs and PCs in general:

 

iPad is cannibalizing Mac, but cool cause that’s us eating our own lunch. Does not predict demise of PC industry... iPad is eating more into PC space than Mac space... iPad will be good for industries (PC and tablet) because it will require industry to sharpen its message.

 

Just under 98B in cash... used sparingly in past. Why the reluctance for dividends and share buybacks and should we expect that to change.

 

TC: I disagree we’ve used it sparingly. Billions in supply chain... billion on acquisitions (iP included)... billions on retail... but yeah we still have a lot. We’re judicious. We’re deliberate. We spend our money like its our last penny. Not religious about holding money, but need to be deliberate and really think through what to do with cash.

 

we have more cash than we need to run the business on a daily basis... actively discussing what to do with it

 

TV... still a hobby... why and what happens going forward?

 

Not talking about future products... we call it a hobby because we don’t want people to think we think its iPhone/iPad/iPod size.

 

We don;t do hobies as a rule... and yet with Apple TV - despite the barriers in that amrket - we’ve always thought there’s something there... if we keep playing... keep pulling the string, we may find what that thing is. 

 

Siri and iCloud... how important going forward?

 

Both are profound. iCloud strategy for next decade or more.

 

Siri... keyboard and mouse were inputs for computers for years. Evolution in that space but not revolution. Then comes multi-touch... now Siri is “another profound change in input.” 

 

You’ll talk to your grandkids about these as profound changes.

 

CEO’s leave mark on company strategy and culture: What’s the Tim Cook mark?

 

"Apple is this unique company and unique culture that you can’t replicate. I’m not going witness or permit the slow undoing of it. Steve grilled in all of us over many years that the company should revolve around great products and that we should stay extremely focused on few things rather than trying to do so many that we did nothing well. We should only go into markets where we can make a significant contribution to society, not just sell a lot of product. These are the things I focus on because those are the things that make Apple a magical place that make people want to do their life’s best work. 

 

"We’re always focused on the future. We don’t sit and think about how wonderful things were yesterday."