Apple's Cook opens up on supply chain

Summary:Amid recent criticism and debate over working conditions along Apple's supply chain, CEO Tim Cook spoke on the matter while speaking at the Goldman Sachs Technology and Internet Conference 2012.

Amid recent criticism and debate over working conditions along Apple's supply chain, CEO Tim Cook spoke on the matter while speaking at the Goldman Sachs Technology and Internet Conference 2012.

"The first thing that I would want everyone to know is that Apple takes working conditions very, very seriously, and we have for a very long time," Cook said. "Whether workers are in Europe, or in Asia, or in the United States, we care about every worker."

Cook explained that he has "spent a lot of time in factories, and not just as an executive", adding that most of Apple's top managers and executives visit factories on a regular basis. Thus, Cook said that Apple is "very connected to the production process, and we understand working conditions at a granular level".

Positing that while the supply chain and issues surrounding it are complex, Apple's commitment to widespread change along the supply chain is simple.

Those changes are going to be evaluated with progress reports published on a monthly basis on Apple's website.

Cook used education as one example of a "great equaliser", as Apple offers free classes in many locations, sometimes partnering with local colleges to provide classes covering English and computer skills.

More than 60,000 employees have attended these classes, which Cook described as "pretty amazing", equating it to a campus population larger than Arizona State University.

"Many of these workers go on to earn associates degrees, so it's a powerful stepping stone for advancing careers," Cook said.

In terms of problems Apple is working to fix, Cook asserted that "no one in our industry is doing more to improve working conditions than Apple".

One issue that Cook addressed specifically was under-age labour, explaining that if Apple finds a supplier that hires under-age labour, it's a firing offence.

The iPhone's "Halo" effect

Switching gears, Cook briefly discussed about Apple's smashing earnings results quarters in which Apple sold more than 37 million iPhones, Cook jokingly remarked that it was a "decent quarter" to some soft laughter from the keynote audience.

"What seems large to me is the opportunity," Cook said, saying that Apple will continue to develop the ecosystem around the iPhone to take advantage of the opportunity presented by the growing smartphone market.

Cook went on to explain how the iPhone has created "a halo" for Apple's other products in the past and present, bringing more attention to (especially in developing markets) to the iPod, iPad and MacBook.

"The world changed for us when the iPhone was launched," Cook said. "It introduced our brand to people who never met Apple before."

The iPad's unexpected success

As for the iPad, Cook admitted that the success of the iOS tablet over the past seven quarters was something that even Apple didn't expect.

Describing both the iPad and the pace of innovation for it as "incredible", it could actually be rather incredible considering Apple has not altered the price points nor the storage capacity options in the last two years since launching it.

But the reason that it's so large, in Cook's view, is that the iPad "stood on the shoulders of everything that came before it", such as the iPhone and iTunes App Store, so using the iPad was already intuitive.

In terms of where the iPad is headed, Cook remained steadfast in the belief that the tablet market will surpass the unit sales of the PC market. Cook tried to reassure the audience that he does "love the Mac", and that brand will continue to grow, but tablets will actually "cannibalise" PCs.

But as for those other tablets in the market, Cook didn't have a high regard for anything lower (especially in terms of price) than the iPad.

Cook acknowledged that "a cheap product might sell some units", but without naming any devices specifically, he doesn't regard them as threats.

"When people get home and use it, the joy is gone, and the joy is gone everyday that they use it ... or aren't using it anymore," Cook said.

Cook quickly added, "I love competition. As long as people invent their own stuff, I love competition."

Apple's cash pile

With US$98 million in cash by the end of the last quarter, Apple is in a very comfortable spot. But Cook maintained that Apple isn't letting that go to anyone's head, making Apple look like penny-pinchers.

"We spend our money like it's our last penny. I think shareholders want us to do that," Cook said, adding that "we're in very active discussions at the board level about what we should do".

"We're not going to go have a toga party or do something outlandish," Cook joked. "People don't have to worry that it's going to burn a hole in our pocket."

The future of Apple TV

Although there have been many rumours that Apple is going to go full-throttle into the TV market with an internet-connected panel of its own, Cook naturally did not say anything directly to this point.

However, after selling just shy of 3 million Apple TV units last year, the interest is obviously there.

"With Apple TV, despite the barriers in that market, for those of us who use it, we've always thought there was something there," Cook explained. "If we kept following our intuition and kept pulling the string, that we might find something that was larger."

Nevertheless, don't get your hopes up too fast.

"We don't want to send a message to you or shareholders that we think that the market for it is the size of our other businesses," Cook said, whether it be the Mac, iPod or iPhone brands.

Cook concluded that former CEO Steve Jobs "grilled in all of us over many years that the company should revolve around great products, and we should stay extremely focused on a few things rather than try to do so many that we did nothing well".

"We're always focused on the future," Cook said. "We don't sit and think about how great things were yesterday."

Via ZDNet US

Topics: Apple

About

Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider, FastCompany.com, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for MainStreet.com, Irish Americ... Full Bio

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