Ref lections of Apple’s CEO
Tim Cook reflects on his first 5 years in one of the business world’s hottest spotlights.
Tim Cook discusses Steve Jobs, iPhones, changes, mistakes and what’s next.
On a sleek white coffee table in Apple Inc. Chief Executive Tim Cook’s fourthfloor office in late July, beneath framed posters of Robert F. Kennedy, the Rev. Martin Luther King Jr. and Jackie Robinson, a rose-gold iPhone 6s sits in its original box. Earlier that morning, Cook had stood in front of employees at Apple headquarters and held up the phone, which a staffer had hand-delivered from a store in Beijing to commemorate a notable occasion: Apple had sold its billionth iPhone.
That celebratory milestone aptly coincides with another big moment for the technology giant’s chief executive. This week, Cook marks the fifth anniversary of what has been the most closely watched transition of power in corporate history: On Aug. 24, 2011, just six weeks before his death, Apple founder Steve Jobs permanently handed the reins to his chief operating officer. “It’s been a blur in a lot of ways,” says Cook, who had filled in for Jobs during medical leaves.
It is fitting that these two milestones arrive so close together. That’s because the iPhone, launched by Jobs, has been the biggest driver of Apple’s massive growth during Cook’s tenure. It led the company to soaring valuations and accounted for nearly two-thirds of Apple’s revenue in the last year. Just the tally on iPhone sales, almost $141 billion over the last four quarters, is more than the annual sales figures of Cisco, Disney and Nike combined.
But the iPhone has been a source of recent disappointment, too. In Apple’s most recent quarter, iPhone sales fell 23% from a year earlier, contributing to a 14.6% drop in overall revenue. It was Apple’s second consecutive quarterly drop in sales after 13 years of growth.
Just after Apple disclosed those results, Cook sat down to discuss his first five years in one of corporate America’s most glaring spotlights.
Cook, 55, chooses his words carefully, taking long pauses and speaking with a slight Alabama drawl. And while he’s quick to trumpet Apple, he is also unassuming, quickly noting, after saying his job can be “lonely,” that “I’m not looking for any sympathy. CEOs don’t need any sympathy.”
That reflects how Cook’s imprint on Apple has often been described — making it more systematic, more transparent, more team-oriented, more humble. He has engaged on social issues more than most chief executives, writing op-eds on legislation that limits gay rights and making the extraordinary decision this year to oppose the FBI’s request to unlock the San Bernardino killer’s phone.
As chief executive, he gets high marks for managing the company’s growth, keeping margins high and expanding further into markets such as China. (Apple had four retail stores in China five years ago. Today it has 41.) He has pushed into the enterprise market, expanded Apple’s product lineup and positioned Apple to make more money off the devices it’s already sold: Its services business, which includes things like iTunes, iCloud and a mobile payments service, is projected to be the size of a Fortune 100 business next year — all on its own. Apple remains the most valuable and most profitable company in the S&P 500 index.
Yet as the company deals with declining sales in its major device categories and in markets such as China, critics and some investors have fretted about Apple’s innovation mojo under Cook. The first all-new device during his tenure, the Apple Watch, is not yet a mega hit. The iPhone juggernaut faces a saturated smartphone market, growing competition from startups and longer upgrade windows from consumers. Rumored big concepts behind the curtain — such as a reported car project — appear to be years away.
Some analysts say such impatience is shortsighted, and that the long-term potential for things like services, augmented reality and even a possible car could ultimately transform the way Cook’s tenure is viewed.
In the conversation below, Cook looks back as well as ahead . The interview has been edited for length and clarity.
Your first day in this job, you sent a memo to employees that said, “I want you to be confident that Apple is not going to change.” Five years later, it has to have changed. What qualities of Apple are immutable, in your view?
The DNA of the company is really what I was talking about there. The North Star has always been the same, which for us, is about making insanely great products that really change the world in some way — enrich people’s lives. And so our reason for being hasn’t changed.
Other things do change. But that’s the thread that ties everyone together.
And what has changed?
The obvious things are we have more employees. The company is four times larger [by revenue since 2010]. We’ve broadened the iPhone lineup. That was a really key decision and I think a very good one. We’ve gone into the Apple Watch business, which has gotten us into wellness and in health. We keep pulling that string to see where that takes us.
You’ve said you don’t want to be a traditional CEO. What do you mean by that?
I think of a traditional CEO as being divorced from customers. A lot of consumer company CEOs — they’re not really interacting with consumers.
I also think that the traditional CEO believes his or her job is the profit and loss, is the revenue statement, the income and expense, the balance sheet. Those are important, but I don’t think they’re all that’s important. There’s an incredible responsibility to the employees of the company, to the communities and the countries that the company operates in, to people who assemble its products, to developers, to the whole ecosystem of the company. And so I have a maybe nontraditional view there. I get criticized for it some, I recognize. But I’ve never wanted to be the stereotypical CEO. I don’t think I’d be very good at it, honestly. And I don’t think for Apple that would in the long run be good for the company. If you care about longterm shareholder return, all of these other things are really critical.
You’ve got the billionth iPhone on the table here. One thing that has changed is that in 2011 about 44% of the company’s sales came from iPhone. Now it’s close to two-thirds. How can Apple move forward when so much of its business is tied up in the iPhone and an industry that’s cooling off?
This is actually a privilege, not a problem. Think about this: What other products do you know where the ratio of people to the product, for a consumer electronics product, will be 1 to 1 over the long haul? I don’t think there is another one.
Meaning?
The global sales of PCs each year are about 275 million right now. That number’s been declining. The global market for smartphones is 1.4 billion. Over time, I’m convinced every person in the world will have a smartphone. That may take a while, and they won’t all have iPhones. But it is the greatest market on Earth from a consumer electronics point of view.
So to those who ask where’s the next big, world-changing category for Apple — it’s sitting on this $231.5-billion pile of cash — are you saying there’s nothing like the smartphone?
I’m not saying we’re not going to do anything else. I’m saying this is still an unbelievable product category to be in, and not just for this quarter, year or for years. So I would not want anybody to think this, oh, this “better days are behind us” thing.
When you look back, are there mistakes you’ve made that you’ve learned something from?
Maps was a mistake. Today we have a product we’re proud of. But we had the selfhonesty to admit this wasn’t our finest hour and the courage to choose another way of doing it.
What else?
I hired the wrong person for retail [former Dixons Chief Executive John Browett] initially. That was clearly a screw-up. I’m not saying anything bad about him. He didn’t fit here culturally is a good way to describe it. We all talked to him, and I made the final decision, and it was wrong. We fairly quickly recognized it and made a change.
It’s sort of a lonely job. The adage that it’s lonely — the CEO job is lonely — is accurate in a lot of ways. I’m not looking for any sympathy. You have to recognize that you have blind spots.
There’s been a number of reports about Apple’s car project — the people who are being hired or moved into place to lead it. It gets enough attention that it almost seems like an open secret. Why not say something about it?
I can’t answer a question about something we haven’t announced .... We’ve always viewed that people love surprises. We don’t have enough anymore in our lives.