Cook Says Innovation, Not Acquisition, Remains Central to Apple’s Future


If there is any specific forthcoming initiative tied to why Apple CEO Tim Cook’s will sit with First Lady Michelle Obama at tonight’s State of the Union Address, Cook’s morning remarks at the Goldman Sachs Technology and Internet Conference offered no clue.

But Cook — who also made no major product announcements or huge news in remarks made in conversation with analyst Bill Shope — nonetheless revealed that cash-rich, acquisition-shy Apple has evaluated far more companies than it has ultimately absorbed — and will likely continue to do so.

“We have looked at large companies,” Cook said. “In each case that we’ve done that thus far, it didn’t pass our tests.”

He added: “Cash is not burning a hole in our pocket.”[more]

Apple’s need to purchase other companies is diminished because it works hard to create a culture of innovation within its own hallways, Cook said. An important element that is embedded into the company culture, he said, is that there are no limits and that the customer experience is crucial.

“Does the speed of a processor matter?” he asked. “You want a fabulous experience. If you look at display, some people think it’s size. … There are many attributes of the display and Apple sweats every detail. We care about all of them. The customer experience is always broader than what can be defined as a simple number.”

The customer experience is also embedded in Apple’s retail locations, Cook said, and said  the company will invest in the area significantly. After all, last year, each of Apple’s nearly 400 stores brought in an average of $15 million.

Twenty Apple stores will be closed and moved to larger locations, Cook said, while 30 completely new stores will open this year, most beyond the United States. The addition of a store in Turkey will grow Apple’s retail reach to 13 countries, he said.

Cook told analysts that he felt the Apple stores were key to the success of the iPad because they allowed consumers to try out the devices and understand what they could mean to their lives. “I think having the stores helps us educate people about new categories,” Cook said.

When the iPad first appeared in 2010, Cook noted that many thought that it was going to cannibalize and damage sales of the Mac, but it didn’t. At Apple, Cook said, cannibalization isn’t even considered when creating a new product.

“I think if a company ever begins to use cannibalization as a major factor in decision making, it’s the beginning of the end,” he said. “There will always be someone else who will be doing it if you don’t.”

Having sold more than 125 million iPhones and more than 58 million iPads, there is a concern that Apple may be reaching a saturation point, but Cook sees a world of opportunity ahead for both of those products both domestically and internationally.

“Limit isn’t in the Apple vocabulary,” Cook said. “The people I work with don’t view that there are limits. It’s because of that that Apple has been able to do so many things over so many years to create products that people didn’t even know they wanted and now can’t live without.”

As for what tonight holds, speculation continues. Obama has also invited NASA’s “Mohawk Guy,” Bobak Ferdowski, to attend, fueling the idea that cybersecurity or other technological issues may be emphasized in the address.

TheNextWeb also notes that Apple’s announcement last year to increase its manufacturing in the United States may also tie into Obama’s planned remarks on job growth.