Being the biggest company in the world brings with it, its own set of problems and for Apple that means that every single word uttered by its CEO is analysed and interpreted by hundreds of people around the world.
Tim Cook spoke to the Goldman Sachs Technology Conference yesterday and the full transcript of what he said about can be found here, thanks to MacRumours. In his interview, Cook spoke at length about the recent investigation into workers conditions at the Chinese factories which assemble the iPad and iPhone. however of ore interest was what he said about the iPad, the possibility of an iTV and the opportunities in the smartphone market.
Cook was asked if he thought the tablet market would become larger than the PC market in time. He said: “We started using it [original iPad] at Apple well before it was launched. We had our shades pulled so no one could see us, but it quickly became that 80-90 per cent of my consumption and work was done on the iPad. 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.”
Cook believes the PC will continue to serve a purpose but thinks that tablets will cannibalise some of the PC market share, including some Mac sales. “I believe the iPad is cannibalising some Macs but more PCs. There are more of them to cannibalise than Macs so that’s a plus to us.”
Cook also addressed the competition in the tablet market, but dismissed a lot of them as being “cheap” and that the joy of saving some money up front is short-lived compared to the joy of owning a premium product: “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. The joy is gone every day that they use it until they aren’t using it anymore. You don’t keep remembering “I got a good deal,” because you hate it.”
The Amazon Kindle Fire, which Apple sees as its main competitor in the tablet market.
Cook did however single out the Amazon Kindle Fire for special mention, highlighting the fact it was Apple’s single largest competition in the tablet market: “Amazon is a different competitor. They have different strengths. They’ll sell a lot of units. They have and they will.”
Apple has sold 55 million iPads since launching just under two years ago making it the fastest selling product in Apple’s history. The company is set to launch the third iteration of the iPad in the coming weeks, though many believe this will only be a small upgrade from the iPad 2 and could be called the iPad 2S.
Moving onto Apple’s possible television project, Tim Cook did hint that the company is looking to do more than what it is currently doing with the Apple TV, which Cook, like his predecessor Steve Jobs, described as a “hobby.”
3m Apple TVs sold in the last year, with 1.4m of those sold in the last quarter alone, but despite this rapid increase in sales, Cook still doesn’t see it as a large business. It’s clearly ramping, but the reality, 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.”
Tim Cook has hinted that an Apple iTV could be on the way
However, Cook also hinted that Apple was working on something “larger”, something which will be more “mass market” and which could be the rumoured iTV that is reported to be in testing with cable companies in Canada at the moment.
“If we kept following our intuition and kept pulling the string, we might find something that was larger. For those people that have it right now, the customer satisfaction is off the chart. We need something that could go more main-market for it to be a serious category.”
Turning to the smartphone market, Cook said that while the 37m iPhones shipped in the fourth quarter of 2011 was a “big number” and it was a “decent quarter” there is a lot more opportunities out there. “As I see it, that 37m for last quarter represented 24 per cent of the smartphone market. There are three out of four people buying something else. Nine out of 10 phone buyers are buying something else.”
“[The] handset market is projected to go from 1.5 to 2 billion units. Take it in the context of these numbers, the truth is that this is a jaw-dropping industry with enormous opportunity. Up against those numbers, the numbers [of iPhones sold] don’t seem so large anymore. What seems so large to me is the opportunity.”
Emerging markets are obviously of huge importance to the company and with 25 per cent of the smartphone market (1bn handsets) coming from China and Brazil by 2015, it is an area Apple is certainly concentrating a lot of effort on.
“In 2007 – we didn’t launch the iPhone until 2008. In 2007, the revenue combined from Greater China, several other parts of Asia, India, Latin America, Eastern Europe, Middle East, Africa, was $1.4bn. Revenue last year for that same group of countries was $22bn. We’re only on the surface. That’s how I feel. We focused mainly in China. Last year we began to focus increasingly more in Brazil and Russia.”
So with Apple’s shares passing the $500 mark for the first time earlier this week, it seems as if the future is bright for the company and with the iPad 3, iPhone 5 and iTV all set for lunch this year, who are we to argue?