Apple's Tim Cook talks shop with Goldman Sachs

Chief executive takes the stage at an investor conference, making a rare public appearance to talk about overseas labor, product growth, the company's cash pile, and the future of Apple.

Josh Lowensohn Former Senior Writer
Josh Lowensohn joined CNET in 2006 and now covers Apple. Before that, Josh wrote about everything from new Web start-ups, to remote-controlled robots that watch your house. Prior to joining CNET, Josh covered breaking video game news, as well as reviewing game software. His current console favorite is the Xbox 360.
Josh Lowensohn
7 min read
Apple CEO Tim Cook at last year's Verizon iPhone debut.
Apple CEO Tim Cook, seen here at last year's Verizon iPhone debut, spoke at a Goldman Sachs conference in San Francisco today. Sarah Tew

Apple's CEO Tim Cook took to the stage earlier today, but it wasn't to announce a new tablet.

Instead, Cook was making a rather rare public appearance as part of a keynote interview at the Goldman Sachs' annual Technology and Internet Conference in San Francisco to discuss everything from worker safety to what the company plans to do with its growing pile of cash and liquid assets.

Cook spent the first part of the interview, led by Goldman Sachs analyst Bill Shope, detailing the company's efforts to improve the conditions at its suppliers and manufacturers. It was the first such public speech on the topic since the company's announcement yesterday that it had requested an immediate inspection of facilities at Foxconn in China.

"No one in our industry is doing more to improve working conditions than Apple," Cook said, adding that he had personally spent "a lot of time" in factories, including a stint at a paper mill in Alabama as well as in an aluminum plant in Virginia.

"I realize that this supply chain is complex, and I'm sure you realize this. And the issues that surround it are complex, but our commitment is very simple," Cook continued. "We believe that every worker has the right to a fair and safe work environment, free of discrimination, where they can earn competitive wages and where they can voice their complaints freely."

There weren't too many surprises to come out the rest of the interview, with Cook reiterating many of the statements made during several of the company's previous earnings calls.

Besides Cook, other executives speaking at Goldman's conference include: Rich Templeton, the CEO of Texas Instruments; Paul Jacobs, Qualcomm's CEO; and Broadcom CEO Scott McGregor.

Here's a full breakdown of the Q&A by topic:

A worker at an Apple supplier facility in Chengdu, China, uses a laser etching machine.
A worker at an Apple supplier facility in Chengdu, China, uses a laser etching machine. Apple

Manufacturing partners: While pledging the company's commitment to fair and safe working environments, Cook added that its supplier partners have to meet its requirements to do business with the company.

Cook also said that the "great equalizer" is education, with Apple providing free classes in "many" locations among the company's supply chain, as well as partnerships with local colleges to provide classes in English and entrepreneurship. Some 60,000 employees have attended these courses, Cook said, which is more people than attend Arizona State University.

Alongside that, Apple will now provide a monthly report on its supply chain findings, which will be posted to its supplier responsibility Web site.

iPhone growth: Cook described the 37 million iPhones sold in Apple's last reported quarter as "a decent quarter." Cook then said if you look at the handset markets going from a projected 1.5 billion units to 2 billion units, there's an "enormous opportunity to it."

"What we're focusing on is the same thing we've always focused on. Making the world's best products," Cook said. "We think if we stay laser-focused on that, and develop the ecosystem around that, we have a pretty good opportunity to take advantage of this enormous market."

Emerging markets: Cook highlighted that nearly a quarter of the smartphone market will be made up of China and Brazil by 2015, making those two "critical" markets. Cook said that instead of focusing on doing specific business moves for particular markets the company has focused on making products everyone wants.

"What I see is that there's a lot of commonality with what people around the world want," Cook said. "Everybody wants the best products. They're not looking for a cheap version of the best product, they're looking for the best product. That's the common thread that runs through."

iPhones are making people buy Macs and iPads, Cook said.
iPhones are making people buy Macs and iPads, Cook said. Apple

Halo effect: Cook noted that the iPod has had a marked halo effect on the sales of Macs, but mostly in developed markets--not in places like Africa, China, Asia, and Eastern Europe, where Cook said people were already getting music from their phones. That changed with the iPhone, Cook said. Now the company's seeing the same thing happening with the iPhone and the iPad, with users who have an iPhone going on to pick up a tablet too.

iPad growth, developer ecosystem: Cook described iPad adoption as the fastest across a "wide range" that he had ever seen, which he attributed in large part to many of its technologies already existing ahead of its launch.

"The iPad has stood on the shoulders of everything that came before it," he said. "iTunes was already in place, the App Store was already in place. People were trained on iPhone. They already knew about multitouch."

Cook added that when the company was testing out the first-generation device ahead of its launch, it took over "80 to 90 percent" of his consumption and work.

Cook also took a dig at competitors, saying that the iPad now had more than 170,000 apps written explicitly for it, and that if you were to hold a conference at the same hotel where the interview was going on, you'd have "somebody covering every square inch" of the space. That's as opposed to a conference for people working on the "coolest" PC software. "You might not have anyone at the meeting!" Cook joked.

Cannibalization: Cook once again noted that the iPad has cannibalized "some" Mac sales, but that it's cannibalizing "more" from the Windows PC side than Macs. He also suggested that the extra pressure will force competitors to "innovate like crazy."

Apple's cash pile: Cook defended the company's hoard of cash and liquid investments by saying that Apple's "spent billions in the supply chain" as well as intellectual property, on its retail stores, and infrastructure of its data stores to back up services like the App Store and iCloud.

"We're judicious and deliberate," Cook said. "We spend our money like it's our last penny, and I think our shareholders want us to do that. They don't want us to act like we're rich. We've never felt that way, honestly. It may sound bizarre but it's the truth." Nonetheless, Cook described Apple's board's discussions on how to use the cash as "being discussed more now, and in greater detail" than before.

"It's clear to everyone that we have more cash than we need to run the business on a daily basis," Cook said. "I would ask for a bit of patience so we can do this in a deliberate way so we can make a decision that respects the shareholders."

The future of Apple TV: Cook steered clear from a question about the future of Apple's interest in offering a TV set, focusing on the success of the company's set-top box instead. That includes sales of 1.4 million units in its previously reported quarter, bringing Apple's total up to "just shy of 3 million" Apple TV units for all of 2011.

Cook did say one interesting bit, however, which was that despite its sales--which Apple considers a "hobby" product--the company "thought there was something there," and that "we need something that could go more main market for it to be a serious category."

Apple's Siri.
Apple's Siri. Apple

Siri and iCloud: On a question about Siri and iCloud's importance in the future, Cook described both devices as "profound," and as "things that you'll talk to your grandkids about that are profound changes."

Cook reiterated claims made last month that iCloud is the company's "strategy for the next decade," and a solution to the problem of syncing data between mobile devices.

As for Siri, Cook noted that the product was still in beta, but that he already felt like he couldn't live without it. He then compared it to the kind of user interface changes the company went from when going from including multitouch on its trackpads to the iPhone, then iPad.

On leaving a mark at Apple: Cook said he would not "witness or permit the slow undoing" of Apple's "unique" and "original" culture.

"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 a few things, rather than try to do so many that we did nothing well," Cook said. "So these things, along with keeping excellence as an expectation at everything in Apple, these are the things I focus on."

Cook added that there was "no better thrill" than looking out and seeing people using the company's products. "These are the things that bring joy to my life. There's no substitute for that."

Next Thursday is Apple's annual shareholders meeting, where Cook is expected to field questions once again, this time from individual investors who are in attendance.

Among the proposals that shareholders will vote on is one from the National Center for Public Policy Research asking the company to investigate whether board member Al Gore violated Apple's business conduct policy with his part in the termination of the company's membership in the U.S. Chamber of Commerce. Other topics going to a vote include a "shareholder say on director pay" initiative, disclosure of any political contributions, as well as a majority voting standard for the company's directors.