As he has in previous years, Apple CEO Tim Cook recently participated in the annual Goldman Sachs Technology and Internet Conference. At the conference, Cook discussed everything from the impact of the upcoming Apple Watch on consumers’ lives to the company’s latest renewable energy initiatives. Here are seven key revelations about Apple that Cook shared at this year’s Goldman Sachs Technology and Internet Conference. All of Tim Cook’s quotes are derived from a transcript of the conference provided by iMore, unless otherwise indicated.
1. What law of large numbers?
Apple posted a record net profit of $18 billion for last quarter and the company’s market capitalization recently crossed the $700 billion threshold. According to Bloomberg, Goldman Sachs interviewer Gary Cohn noted that Apple seems to have been unaffected by the “law of large numbers.” As noted by Bloomberg, the actual law of large numbers may not apply to Apple’s situation, but in this context the interviewer seemed to be conveying the idea that the more revenue a company generates, the harder it becomes to achieve growth.
“[W]e don’t believe in such laws as laws of large numbers,” said Cook. “This is sort of, uh, old dogma, I think, that was cooked up by somebody and Steve [Jobs] did a lot of things for us for many years, but one of the things he ingrained in us [is] that putting limits on your thinking [is] never good. And so, we’re actually not focused on numbers, we’re focused on the things that produce the numbers, right?”
Cook went on to name several recently released products, features, and services that “produce the numbers” for Apple, such as the iPhone 6, the iPhone 6 Plus, Touch ID, HealthKit, HomeKit, and CarPlay. He also pointed to the company’s growth opportunities in China and the enterprise market. In other words, Cook doesn’t see any “laws” limiting Apple’s growth, at least in the foreseeable future.
2. Apple believes in solar power
At the conference, Cook announced that Apple was partnering with First Solar as part of an ongoing effort to power all the company’s facilities with renewable energy. The $848 million project will create a massive solar farm that will provide power for the new Apple Campus 2 that is currently under construction. While Cook pointed out that it made financial sense for Apple to invest in green energy, he also noted that the company would do it even if it didn’t because “quite frankly, we are doing this because it is right to do.”
“[W]e know, in Apple, that climate change is real,” added Cook. “And our view is that the time for talk has passed, and the time for action is now.” Apple already powers all of its data centers with renewable energy, but the company has a long term goal is to use renewable energy for all of its retail stores and corporate campuses as well.
3. The Apple Watch will change your life
Cook cited Apple’s impressive track record of disrupting established product categories as evidence for how the Apple Watch will impact the existing smartwatch market. “There are several things that are called ‘smart watches’ that are shipping, but I’m not sure you could name any. Maybe you could. I’m not sure the audience could name very many” stated Cook. “But certainly there’s been none that have changed the way people live their lives.”
“And so what we want to do at Apple, that’s our objective: We want to change the way you live your life. And just like this iPad has changed the way you work, and hopefully the way you live, and the iPhone has done that, we see the Apple Watch doing that,” concluded Cook.
Cook claimed that the Apple Watch has already improved the way he and other Apple Watch testers interact with their mobile devices by making the process less disruptive. He also noted that Apple Watch testers tend to stand up and move more frequently due to the device’s activity prompts. For all of these reasons, Cook believes that the Apple Watch will be a device that changes how consumers live.
4. Apple Pay is moving faster than expected
Since Apple did not break out its Apple Pay revenue numbers in its last quarterly results, most information about the roll out of the mobile payments system has come from outside research firms. For example, Investment Technology Group (ITG) estimated that Apple Pay accounted for about 1% of all digital payment dollars in November 2014. Cook shed a little more light on the success of Apple Pay with his comments at the tech conference.
“[B]y December, two out of three dollars that were spent in stores with contactless payments, on contactless payments — were Apple Pay,” said Cook. “And this is by the three major networks: AmEx, Visa, and Mastercard. And so it’s essentially the overwhelming vast majority of the market.”
Cook noted that adoption of Apple Pay by merchants has been going faster than expected, especially considering that the system was introduced right before the holiday shopping season, a time when most merchants are not keen on implementing a new payment system. The Apple CEO also highlighted JetBlue’s recent announcement that it would be accepting Apple Pay on flights. “And so the rollout is going much faster than I would have thought, and I think it’s truly profound,” said Cook.
5. Don’t expect a cheap iPhone
Analysts that want Apple to release a low-cost version of its iPhone in order to boost its overall sales numbers should probably not hold their breath. In his comments at the tech conference, Cook made it clear that Apple’s goal is to make the best products it possibly can, not the most. On the other hand, he noted that the company may have achieved both goals last quarter. According to data from Strategy Analytics, Apple’s record 74.5 million iPhone sales tied Samsung’s smartphone sales during the holiday quarter.
“But what we won’t do is do something that’s second-rate, or that’s only a good product, not a great product,” stated Cook. “Because that’s not what Apple stands for, and that’s not what we think customers want.”
Cook recalled that many analysts were advising Apple to make a cheaper iPhone for the Chinese market because those consumers supposedly wouldn’t pay a premium price for a smartphone. “Well, let me tell you, it’s a bunch of bull! It’s not true!” exclaimed Cook. “People everywhere in this world want a great product. And that doesn’t mean that everyone, every single person in the world can afford one yet. But everyone wants one.”
Apple’s iPhone sales were especially impressive in China last quarter, where it took the No. 1 spot in the smartphone market for the first time, according to market research firm Canalys. “And so, if we do our jobs right, and keep making great products, I think there’s a pretty good business there for us,” added Cook.
6. Apple’s partnership with IBM will change the way you work
Besides changing the way you live with the Apple Watch, Apple also has plans to change the way you work through its enterprise partnership with IBM. Apple first announced its partnership with IBM last summer. Last December, the first IBM MobileFirst for iOS apps were released.
“We want to change the way people work. This is what excites us,” stated Cook. “Just as we changed consumers’ lives, we want to change the way people work.” He noted that the partnership grew out of a realization that the two companies have complementary skills, but also out of knowledge that there is a lot of growth potential in bringing mobility to enterprise.
“Because the truth is, enterprise has not moved to mobility in a big way like the consumer has,” observed Cook. “There’s still so many people stuck at their desks in the enterprise. It’s unbelievable when you really think about it.”
7. Don’t underestimate the Mac
Although most consumers and analysts are focused on Apple’s latest iPhone models and upcoming Apple Watch, Cook emphasized the innovations going on in the company’s steadily growing Mac business. While the overall traditional personal computer industry has stagnated due to the rising popularity of mobile devices, Apple has managed to gain market share for the past 10 consecutive years, according to Cook.
“And the reason is we’re innovating like crazy in it. We came out with the iMac last year with a 5K Retina display, the world’s first,” said Cook. “Our notebooks have incredible battery life, they’re thin and light, they’re powerful, the OS is unbelievable, and so we’re continuing to invest here, and we think we’ve got a bright future.”
Although Cook didn’t tip Apple’s future plans for this product category, there are persistent rumors that the company will launch a redesigned 12-inch MacBook Air with Retina display this year that will be even thinner than the current notebooks. As previously reported by Tech Cheat Sheet, there is speculation that this device will make its debut in mid-2015, possibly at the annual Worldwide Developers Conference (WWDC) in June.
Follow Nathanael on Twitter @ArnoldEtan_WSCS