800 million iTunes accounts and almost all of them have credit cards attached. This is perhaps the most important (and to some extent, most overlooked) part of Apple’s business going forward. They’ll hit a billion very soon.
Tim Cook’s second explanation on the iPad “miss” was better than his first. At first, he said it was channel inventory and sell-through. But later he spoke about how fast it grew — faster than any other product Apple has ever done — and implied that it’s hard to maintain such growth. Both explanations may be true, but the first is a technicality, the second is something everyone should be able to understand.
iPad revenue for the quarter was $7.6 billion. If my math is correct, the iPad has brought it roughly $32 billion in revenue in the past 12 months. If it were a stand-alone business, those numbers would place it in the top 100 of the Fortune 500. Think about that for a second.
By the same count, the iPhone as a stand-alone business would be in the top 25 of the Fortune 500.
Apple cash horde was actually down this quarter due to the buybacks. But it was almost all U.S. cash that was down — Apple still refuses to repatriate the overseas cash and instead is borrowing debt to pay for these massive buybacks. At one point, it sounded like Apple was basically (but indirectly) asking the U.S. for a tax holiday to bring some of their money back to the U.S.
The iPhone ASP decreased by quite a bit. But it wasn’t because the iPhone 5c is selling well, it’s because the iPhone 4S continues to sell well.
That said, margins overall were still amazing at 39.3 percent.
Angela Ahrendts is starting next week, nullifying reports to the contrary.
Tim Cook continues to sound more confident about the Apple TV as a product category as he announced “about” 20 million units sold. If I had to guess, I think we’ll see a new Apple TV product announced well before the iWatch this year.
Apple under Jobs was a roller coaster, but Cook’s operations fief was orderly and disciplined. Cook knew every detail in every step of the operations processes. Weekly operations meetings could last five to six hours as he ground through every single item. His subordinates soon learned to plan for meetings with him as if they were cramming for an exam. Even a small miss of a couple of hundred units was examined closely. “Your numbers,” one planner recalled him saying flatly, “make me want to jump out that window over there.”
Cook had made a particular point of tackling Apple’s monstrous inventory, which he considered fundamentally evil. He called himself the “Attila the Hun of inventory.”
Meetings with Cook could be terrifying. He exuded a Zenlike calm and didn’t waste words. “Talk about your numbers. Put your spreadsheet up,” he’d say as he nursed a Mountain Dew. (Some staffers wondered why he wasn’t bouncing off the walls from the caffeine.) When Cook turned the spotlight on someone, he hammered them with questions until he was satisfied. “Why is that?” “What do you mean?” “I don’t understand. Why are you not making it clear?” He was known to ask the same exact question 10 times in a row.
No one questions that Tim Cook’s leadership is vastly different from that of Steve Jobs. But that doesn’t necessarily mean he’s any easier to work for. This paints him as demanding, but in different ways.
Apple CEO Tim Cook, talking to Daisuke Wakabayashi:
Last year, we grew (revenue) by $14 billion to $15 billion. Yes, those percentages are smaller compared to a year earlier and two years earlier and so forth. But that doesn’t mean that you’re not a growth company. We were in hyper-growth, or whatever is above growth. We went from $65 billion to over $100 billion to $150 billion to $170 billion. These are historic, unprecedented numbers. I don’t know any companies adding growth at that level. So when you say $14 billion to $15 billion compared to those numbers, it’s clearly smaller and a smaller percentage, but, to put it in some context, that’s like adding three Fortune 500 companies in a year. I think that’s hard to say that’s not a growth company.
We urge senators to support the Employment Nondiscrimination Act, and we challenge the House of Representatives to bring it to the floor for a vote.
Protections that promote equality and diversity should not be conditional on someone’s sexual orientation. For too long, too many people have had to hide that part of their identity in the workplace.
Those who have suffered discrimination have paid the greatest price for this lack of legal protection. But ultimately we all pay a price. If our coworkers cannot be themselves in the workplace, they certainly cannot be their best selves. When that happens, we undermine people’s potential and deny ourselves and our society the full benefits of those individuals’ talents.
If Apple continues to focus on products and customers, in other words, Apple’s stock price will take care of itself. But I know that is not what you are hearing these days from another Apple shareholder, Carl Icahn. Mr. Icahn, who just bought your stock last month — and owns only a fraction of one percent of the company — is demanding that you immediately engage in a massive financial engineering scheme to boost your stock price and give him and other short-term traders a quick payoff.
I definitely don’t agree with all of this, but it’s mainly level-headed thinking against some of Icahn’s ridiculous ideas. (Which Apple undoubtedly knows are ridiculous too, of course.)
The biggest prize for Nike may have come last week, when Apple (AAPL) said its new iPhone would have sensors allowing people to use their phones to keep track of their Fuel points. Apple’s oft-predicted, never-confirmed smartwatch would presumably be a major threat to the FuelBand, but the two companies seem pretty cozy right now. Nike said on Tuesday that it still has no plans to make a Nike+ app for Android, and Olander indicated there are too many devices on the Android operating system to offer a consistent user experience. (He didn’t mention anything about Apple Chief Executive Officer Tim Cook’s presence on Nike’s board.)
Maybe this is naiveté, but given all the signals between the two companies recently (number one being that Tim Cook is still on Nike’s board), I’m starting to be more sure that any wearable Apple does will be in cooperation with Nike, not opposed to them.
Leave aside for now the fact that Tim Cook has been CEO for only two years and that Vogelstein himself acknowledges that under Jobs, the revolutionary products came “every three to five years”. The stuff about the stock price is just nonsense — Apple’s stock price routinely fell after products announcements by Steve Jobs. For all the lip service paid to “innovation”, Wall Street tends to be conservative, rewarding the conventional and punishing the unconventional.
You can actually check these things. Stock prices and the dates of Steve Jobs’s product announcements are matters of fact…
Me, I’ve always thought that it will be impossible to fully judge the Cook era until Apple does enter a wholly new product category. It’s going to do so at some point, and it’s possible that it’ll either go spectacularly well or be a fiasco. Or it might fall somewhere in between, as some of Jobs’ products did. (Exhibit A: The “hobby” known as Apple TV.) But Cook has plenty of wiggle room left before he falls substantially behind Jobs’ pace. I figure he has at least until the end of 2014 or so before there’s reason to join the worry-wart chorus.
Despite today’s trend to vertical integration, Apple stands alone in its ability to integrate at the system level. The truth is silicon is the alchemy which causes consumers to marvel when they hold or touch an iPhone.
This fact is not lost on Tim Cook, who at the operations level understands silicon better than nearly any business leader.
Tim Cook has been taking a lot of heat in recent months both for Apple’s stock price (despite the fact that it ran up to all-time highs under him as well) and for Apple’s perceived inability to innovate (which is foolish given the time scale we’re talking about). Yet something that’s never talked about is Cook’s actual strengths. Before becoming CEO (and perhaps while serving as interim CEO), Cook was widely considered to be the best hardware operations guy in the business.
Apple’s current margins and efficiency are a direct result of Cook. And it certainly seems like the pieces put in place for Apple to control its silicon future are a result of Cook’s operations management as well. We’re now fully seeing the fruits of that labor.