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Highlights From Tim Cook’s Keynote Interview at the Goldman Sachs Tech Conference

Highlights From Tim Cook’s Keynote Interview at the Goldman Sachs Tech Conference

Apple CEO Tim Cook spoke at the Goldman Sachs Technology and Internet Conference, participating in a Q&A session with analyst Bill Shope. Here are some highlights of the Q&A.


Cook was asked about Apple’s cash usage strategy, and if Apple had a “Depression-era mentality.”

“What a way to start! We’re making significant investments in a number of areas: supply chain, retail stores, corporate acquisitions, etc. Now, we do have a significant amount of cash, and we’re fortunate to have that. We’re returning some of it to investors and will continue to have discussions on that.”

He was then asked his thoughts on Greenlight’s proposal about unlocking more capital for shareholders, and also about Greenlight’s lawsuit regarding the proxy statement.

“We welcome input from our shareholders and are discussing a broad array of options.”  Then in reference to the lawsuit, “There are some misconceptions over what this is about. It’s not about turning money back to shareholders. It’s about corporate governance. So we’ve decided to eliminate the ability to issue ‘blank check’ shares ourselves. We could still do it, but would have to go to shareholders for approval. So frankly, this seems bizarre to me that we’re being sued over something that’s good for shareholders […] It’s the right thing to do, and I’m going to vote for it. You’re not going to see a “Yes on 2″ sign in my front yard.”

Cook was asked why most of Apple’s acquisitions are small companies, is there something in Apple’s culture against large acquisitions?

“We do a fair number of acquisitions…one every other month. Most of them are for talented people working on smaller projects that we absorb and then move them to our own projects. PA Semi is an example…talented chip folks working on PowerPC and we moved them to iOS device work. We’ll do more deals like this. 

As for large companies, we have and will continue to look at them. But so far they haven’t passed smell test for us. We could do it, but we’re disciplined. Not interested in just growing revenue, but if there was a large acquisition that fit our needs, we would do it.”

How do we think of Apple’s culture of innovation?

It’s never been stronger. Innovation is so deeply embedded in Apple’s culture. The boldness, ambition, belief there aren’t limits, a desire to make the very best products in the world. It’s the strongest ever. It’s in the DNA of the company […] If you look at skills, Apple is in a unique and unrivaled position. Apple has skills in software, in hardware, and in services.

The model of the PC industry, that model’s not working for what consumers want today. Consumers want an elegant experience where the technology flows to the background  […] In terms of leadership, I look around the executive boardroom and see superstars. Jony Ive is the top designer and now turning his attention to software. Bob Mansfield is the leader in silicon. No one better than Jeff Williams at operations. Schiller, Riccio, etc. I’ve never been more bullish on Apple…we have the talent to pull this off.”

Are we getting to a point in the most important category where you’ve reached a natural limit?

“There’s that word limit. We don’t have that in Apple’s vocabulary. When I zoom out and look at the smartphone market in particular, what I see is a market that is projected to double in the next few years. This is a huge market. On a longer-term basis, all phones will be smartphones and there’s a lot more people in the world than 1.4 billion, and people love to upgrade their phones very regularly […] Innovation has all moved to tablets and smartphones, so there’s so much momentum. When you look at what we’re doing in China, it’s impressive. There are also areas where we’re not doing as well, and we view those as opportunities. When I string all of these things together, I see a wide open field.”

For prepaid customers, the iPhone is not affordable. How do you think about creating a great customer experience?

“This is a popular question […] We wouldn’t do anything we wouldn’t consider a great product. There are other companies that do that, and that’s just not who we are. That said, if you look at what we’ve done to appeal to people who are more price sensitive, we lowered the price for iPhone 4 and iPhone 4S, and in the December quarter, we didn’t have enough supply of iPhone 4, so it suprised us as to the level of demand we had for it. 

We are making moves to make things more affordable. When we came out with iPod it was $399, today you can buy an iPod Shuffle for $49. Instead of saying how can we cheapen this iPod to get it lower, we said how can we do a great product, and we were able to do that. The same thing, but in a different concept in some ways.”

Cook was asked about Apple’s design choices..focusing on iPhone 5 screen size and how Apple’s knows it’s right for users.

“First of all, I’m not going to talk about what we might do in the future. But look back at the PC industry…companies have historically competed on two fronts: price and specs. But customers are interested in the experience. Do you know the speed of an Ax processor? It doesn’t matter. So when we look at displays, there are a lot of factors…and it’s all about the experience. There are many details of a display (Retina is twice as bright as OLED, and better color saturation), and we sweat all of them to create the best experience, which is always broader than can be defined by a single number.”

He was asked about the iPad and the potential for the tablet market.

“It’s a huge opportunity. It’s an ideal example of the intersection of hardware, software, and services. Look at PCs…we sold more iPads last year than market leader HP sold of their entire PC lineup. There were about 120 million sold last year…projections suggest 375 million within four years. 

Apple is the poster child of the post-PC revolution. We have over 300,000 apps custom designed for the tablet. The other guys have a few hundred. [..] Data is very clear that iPad is popular and people use them more. I’m not sure what people are doing with these other tablets. We want people to use our products, not just buy them. “

What are you most proud of in your first year?

I’m incredibly proud… I’m most proud of our employees. They’re there to do not only that great work, but the best work in their lives. They’re there to do it without limits, they’re the most creative in the world. It’s a privilege. I’m incredibly proud of the products, we have the best smartphone on the market, we have the best tablet on the market, we have the best digital music player on the market. For those things we elect to do, and we continue to focus on a few, they’re really great. I’m incredibly bullsih about the future and what Apple can do and more contributions it can make to the world.

I’m very proud that we’re out front, that we have a spine on supply responsibility. I’m incredibly proud that we’re doing heavy lifting with the environment, that we’re eliminating toxins. I’m proud we have the largest private solar farm anywhere, that we can run our data centers on 100% renewable energy. I don’t mean to gush, but it’s how I feel. It’s the privilege of a lifetime and humbling.”

Thanks to The Wall Street Journal and MacRumors for their transcripts.