Apple's Chief Operating Officer Tim Cook spoke at the Goldman Sachs Technology and Internet Conference 2010 today, and Apple provided a link for us to listen in to.
Overall, Cook came off extremely well. He talked about the iPhone, iPod touch, and iPad extensively as well as their iTunes content, app ecosystem, and carrier partners. His key points included Apple saying "no" to good ideas that distract focus from the great ideas they say "yes" to, innovation being driven by their people, and their single-minded goal of making the best products in the world. That was "Apple's magic", and like a lot of magic its simplicity and obviousness are likely what keeps it a secret.
Longer form highlights after the break!
- Apple should be thought of as a mobile device company. If you watch iPad keynote, look at Apple's latest revenues, compare them to Nokia, Sony, Samsung, Apple is largest measured by revenue.
- Transition to mobile for Apple began in 1991 with introduction of first portable Mac. Last several years, Mac has become predominantly mobile device business. Stats show Apple leads PC industry by 10-20 points in portable share. Last decade, Apple announced iPod in 2001, iPhone in 2007, iPad recently, all are mobile devices. Vast majority of revenues come from mobile devices and content purchased for mobile devices. Uniquely positioned to do extremely well, seamless integration of hardware and software, very few companies in the world can do that.
- World not as simple as biggest competitors, partners. Can't cleanly put them in buckets. Take Microsoft, we love the Mac Office division, great product, work with them tightly. Balance of Microsoft they compete vigorously against, OS, mobile OS. Google is similar, partner in map, search, compete with them in mobile OS and now hardware phone space. Media companies, partner with them so well Apple is selling billions of dollars in content. Apple is biggest digital content company in world. Carrier partners also key.
- Apple TV is still a hobby. Other businesses, PC, MP3, phone, are all huge markets, huge unit volume. Apple TV is in small market today. Grew in last quarter 35% so Apple remains interested, improved UI significantly [3.0]. Gut tells Apple something is there. Today, however, go-to-market model is very difficult. Leads to TV and Apple has no interest in being in TV market. Tim Cook is avid Apple TV user, gut says something there, continuing to invest.
- iMac is best desktop computer in the world, doing phenomenally well, will continue to invest in it. 22% unit share in retail desktop (primarily iMac), revenue share was staggering 42%. iMac is key. People will continue to want gorgeous, big screen, simple to use, elegant machine.
- If you look at Mac, has outgrown market 20 or 21 last quarters, outgrew by multiple. PC industry over 300 million unites. Mac did over 10 million. Ceiling is far above. Apple continues to invest tremendous amount of energy and talent. Convince Windows users to switch. Apple provides much better experience. 50% comes from Windows. Going after that.
- iPod family, iPod touch is runaway hit. Helps iPhone platform. Grew 100% year over year, December quarter grew 50%. Every sale helps fuel more app sales, helps fuel more devs, helps fuel platform. Great growth vehicle.
- iPad hasn't sold yet but a lot of interest. Cook has been using it for 6 months. Experience absolutely incredible. Very excited.
- iPhone, just gotten started. Only 2.5 years since first iPhone shipped. Now between iPhone, iPod touch, sold 75 million. iPhone 40 million up to last quarter. Making platform larger and larger, ecosystem better and better. Apps more and more what people desire, can't live without. Very few companies can manage a platform. Apple's been doing it for 30 years. Who would have dreamed of App Store numbers even a year ago?
- "Complete" is not in Apple dictionary. All about innovation, obsoleting themselves. Continue to make things better and better. Ecosystem is really good. Platform is really good. Foundation is in place. Will get better.
- On cannibalization, haven't sold an iPad, Cook is paranoid, but isn't losing sleep over it. Cook's been clear on netbooks, most won't want to continue experience with them, only interested in price. When they look at iPad, play with it, experience magic, compare to netbook, Cook doesn't think they'll buy netbook. Some of those customers are game for iPad. Many others. Will report back once they start selling them.
- iPad distribution will evolve. Launching new category. Launch in Apple direct channels (retail, online, education), and in indirect channels with assisted sales like store-in-store at Best Buy, internationally at Apple Premium Resellers. Places with really great assisted sales but will expand over time. Start where sales people will answer questions.
- Hit $500 for iPad so as not to leave umbrella beneath it for competition. Got very aggressive. Incredible value, amazing experience. Best browsing experience you can imagine, better than 99% can imagine. Have to try it. Email is off the chart. Platform allows apps from App Store. Share photos like never before. Watch video, listen to music, read books. iBook Store will launch when iPad ships. A number of things appreciably better than anything else offered today. Anxious to get it out.
- AT&T, primary advantage of single carrier model like with iPhone is simplicity and some cases can innovate with carrier, offer feature like Visual Voice Mail on iPhone 2G. Hard to do that with multiple carriers. Multi-carrier model question is can you sell more units? In some countries, carriers have sticky relationships with customers so more carriers allow you to sell more units. End of Q1, top 10 countries, 5 of those were single carrier, 3 were contractual exclusivity, 2 can add additional at any time. Added carriers France, UK, Singapore, Scandinavia, Canada. Pleasantly surprised that in every country units and share increased significantly. Good choices but may not be the case in every country, may not do it in every country. Case by case basis.
- AT&T iPad pricing is revolutionary. Unlimited data $29.99/month, 256MB $14.99/month. [Standard pricing for a laptop USB dongle] is $60 with contract. iPad is no contract. Wouldn't want to speculate if other carriers would have to match that to carry iPad.
- Privilege and curse of technology is backwards compatibility vs. innovation. Balancing act between how far to go back, how much of install base to include. Apple's done that for a long time, has come to intelligent conclusion each time. Part of their heritage.
- Doesn't see it as Mac OS or iPhone OS, place for both. Mac OS is amazingly scalable. Huge competitive advantage for Apple. Mac OS from iPod touch to iPad to iPhone to Macintosh. No other company on earth can use foundation of their OS like that. Lets them innovate at fast speed with fewer people than it would take if they were [Microsoft]. Huge advantage.
- Seen interest in Enterprise for iPhone, Mac. iPhone is 2.5 years old. 75% of Fortune 100 are either deploying or currently testing for deployment. 50% of Financial Times 100 are doing same thing. Saw huge uplift in interest after 2.0, 3.0 due to Enterprise features in software. Sees this continuing.
- On Mac, amazing how many CIO's are visiting Apple, interested in Mac. Don't have huge Enterprise direct sales force. Many CIO's who once thought standardization was most important think, now look at salaries and think creativity of people is at peek, increasingly let employees decide. Many employees have always wanted to use Mac. Who wouldn't want to use Mac over Windows PC. Mac OS well known for being more stable, better security, and get ease of use features.
- Cautions people in general, hear Enterprise, think it's bigger than consumer market but it isn't. 10% is Enterprise but consumers are 50%. That's where Apple's heart and soul and DNA are. But these consumers want to use Macs. Now they've developed Bootcamp, can use that 1 Windows program, insurance. Spurred VM Ware, Parallels. Latest Mac OS, Snow Leopard, Exchange support built right in, just works. That's why you see current survey results.
- Apple Retail started in 2001, at it for 9 years. Just short of 300 stores. Apple serious about Retail. 25-50 stores a year. They been at low end of expansion, high end. 2008 world economy began falling apart. Apple slowed down, looked for opportunities for top properties. Now there's a lot of great properties, Apple wants to take advantage, turned dial up, be at high end again, do 50.
- Apple has for years been in silicon design business. PowerPC, Apple always personally crafted Northbridge, Southbridge. Not new. Looked at products they're doing like iPad, future products, felt Apple had best knowledge of what they wanted silicon to do, best ability to deliver themselves (vs. going out and buying not exactly what they wanted). In mobile device world, tremendous parameters other than silicon, thermal characteristic very important. End of the day, they want to make world's best products. [A4] makes them more likely to do that.
- Apple acquires companies for technology and talent, on small side. Have looked at large companies but not had large companies but not path. Don't let money burn hole in their pocket. Unless it makes sense for shareholders, not going to do it. Small companies have been incredibly valuable. Especially talent. Will continue to do that. Find large on, not shy about it, but won't do it to do it. Never been about being biggest, always about making best products. Not highest marketshare or revenue.
- Executive team at Apple spends lot of time thinking and discussing how to retain and recruit best talent in world. People are most important asset by far. People deliver innovation. Key to Apple.
- Apple is most focused company Cook knows of, has read of, has any knowledge of. Says "no" to good ideas, great ideas every day to retain focus on small number of things. Can keep enormous energy behind things they do choose, deliver best products in the world. Table they're sitting at, probably put every product on it Apple makes, yet Apple revenue last year near 40 billion. Only oil company could say that. Not from just saying "yes" to right product, it's saying "no" to many good ideas just not nearly good as other ones. So ingrained in company, hubris which happens to successful companies that decide to get bigger, start adding things, management team at Apple would never let that happen. Not what they're about. Focus on people, ensuring small list of things to work on, put everything behind that, that's Apple's magic.
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