4 Things Apple, Inc.'s Tim Cook Wants You to Know

It's been nearly a month since Apple (NASDAQ: AAPL  ) reported its latest earnings results. It's also less than a month until Apple is expected to unveil the iPhone 6. Ahead of the company's most important product launch of the year, what does Tim Cook want investors to know?

Apple has a lot of room to run in China

China continues to be an extremely important growth market for Apple, thanks, in part, to the recent China Mobile deal that took years to ink.

China, honestly, was surprising to us that it was -- we thought it would be strong, but it well went past what we thought. We came in at 26% of revenue growth, including our retail. And if you look at the units, the unit growth was really off the charts across the board.

iPhone 48% up, that compares to a market estimate of 24%, so growing at two times the market. iPad was up, as well, as I've mentioned before. The Mac was up 39%, and that's versus a market in China that's also contracting along with markets in those parts of the world. And in China, it was projected to contract by 5%.

That iPhone growth rate is particularly impressive considering the proliferation of low-cost vendors. Xiaomi has become an overnight success story and its volume ramp is nothing short of breathtaking, but Apple believes Xiaomi is mostly winning share from other vendors instead of iOS. Last quarter set a new record for Apple's Greater China segment, and it won't be the last.

The Acqui-hire spree continues

Apple's acquisition strategy is changing. Not only is the Mac maker now pursuing much larger deals, with the $3 billion Beats deal being Apple's largest purchase ever, but it's also doing a lot more of them.

Not counting Beats, we've completed 29 acquisitions since the beginning of FY13, including five since the end of the March quarter. And we've brought some incredible technology, and more importantly, some incredible talent into Apple in the process.

We're hard at work and investing heavily on exciting opportunities across our business, and we have an incredible pipeline of new products and services that we can't wait to show you.

Including Beats, that's 30 acquisitions in the first three quarters of fiscal 2014. That's already double the 15 acquisitions that Apple made during fiscal 2013, which itself was triple the five purchases from fiscal 2012. Note that Cook underscores the importance of bringing talent to Apple, making these deals acqui-hires.

Apple welcomes T-Mobile's brave new world

The domestic wireless industry is changing, thanks largely to T-Mobile and its Un-carrier ways. As the industry shifts away from subsidies toward installment plans, Tim Cook sees some upside.

In terms of the installment plans that you mentioned in the U.S. relative to iPhone, there's a lot of different models that are being tried in the U.S., and throughout the world. And actually last quarter, as we estimated, and this is subject to the estimating error, but we're estimating that less in one out of four iPhones were sold on a traditional subsidy plan. And so that number is markedly different than it would've been two years ago.

The installment plans that you're speaking about, which gives the customer the right to upgrade fast, or faster than a usual two-year cycle, we think that that plays to our customer base in a large way. So that makes us incredibly bullish that customers on those plans would be very likely to upgrade when we announce a new product.

By Apple's estimates, less than 25% of smartphones nowadays are sold under the good old-fashioned subsidy model. With the added flexibility to upgrade that comes with installment plans, the iPhone 6 upgrade cycle should be enormous.

Enterprise tablet penetration is still low

Apple likes to tout how many Fortune 500 companies have deployed iOS devices (99%). But within those companies, tablet penetration is still very low, at just 20%.

We win if we can drive that penetration number I spoke about from 20% to 60%. That would be incredibly exciting here. The walls would shake. So that's what I hope for....

We have no plans to change the rules with enterprise. Some enterprises buy proprietary apps that they do not want to offer to others, and so we obviously have a way for them to distribute those into their enterprise on just the employees that they want to. So I'm not worried about changing that.

We're all for taking friction out of the system, and not adding it. Again, the big thing for us is getting the penetration number up, and getting our product iPhones, and iPads, and Macs in more people's hands. We think there's a huge opportunity in enterprise to do that.

Apple hopes to triple that penetration figure in the coming years, which is why it's partnering with IBM in the first place. Despite its massive revenue base, Apple still has plenty of important growth opportunities in the years ahead.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 13, 2014, at 1:51 PM, wiggababies wrote:

    Reminds me of those politically correct TV commercials. You know, the ones that cram different races into unnatural scenarios. For example, that home depot barefootin commercial. Are you serious!?

    This type of phony advertising disturbs minorities and the average american.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3069030, ~/Articles/ArticleHandler.aspx, 11/23/2014 8:51:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement