Apple has been pushing its executive team into the media glare over the last few weeks, with notable contributions from Eddy Cue, Craig Federighi and Johny Srouji. Now it's the turn of CEO Tim Cook, as he is interviewed by Fortune magazine.
As you would expect there are a lot of areas covered, and Cook lays out Apple's public view on many issues. I want to highlight just one here, and that's around iPhone sales. Following the slower growth of iPhone sales in the last quarter, Apple's estimates for the first calendar quarter of 2016 predict either flat or falling sales. Reporting a decline in iPhone sales would be the first for the company.
This has caused a lot of doom and gloom around Cupertinio, which forgets that Apple has just delivered a record-breaking quarter with earnings of $18.04 billion. The short term buzz around Apple is not something that Cook is focusing on. Instead he's looking further out that the next few weeks, with a view that over time the numbers will return to Apple.
I’m good at blocking out the noise. I come back to, Are we doing the right things? Are we remembering our North Star? Are we focused on making the best products that really help people enrich their lives in some way? And we’re doing all those things. People really love our products. Customers are happy. And that’s what drives us. Over time I’m sure that everything else will catch up.
While others argue that the moment of 'peak iPhone' has passed, the interview points to a different attitude to the slowing market sales from Cook and Apple. There's an acceptance that there is a cycle and that iPhone sales will fall, but a cycle means that sales will rise again. There is no such thing as peak iPhone for Apple, just a cycle of higher and lower sales. The phrase 'all this has happened before, and all this will happen again,' comes to mind.
Apple has built up the resources at the top of the cycle to allow it to invest heavily at the bottom of the cycle - a time when other manufacturers may not have the same flexibility. That's when Cook believes Apple can pull ahead in the technological stakes far more effectively:
It helps internally to remind people that Apple has been through cycles: “This too shall pass.” And I think, in sort of a bizarre way, cycles can be really great. They have been for Apple because we tend to steadfastly continue to invest in innovation. And what other companies tend to do is retreat. Some of our greatest innovations and products were born in a period of challenge. Also, assets get cheaper, so you can double down on innovation through the downturn.
Tim Cook is focused on the long-term health of the company, which can bring it into conflict with Wall Street in the short term. It would have been easy in the past to grab more market share (one of the Street's favoured measures of success in the smartphone world) with a cut price iPhone that targeted the $100 market. Instead Apple resisted the temptation to trade down to an easy near-sighted win. With the resources and respect it has, Apple can look much further down the line and argue that is the more profitable route.
Peak iPhone? Tim Cook doesn't believe it exists.
