Tim Cook Says Apple's $1 Trillion Value is a 'Significant Milestone' But 'Not the Most Important Measure of Success' in Employee Memo

[Rogifan]

That just goes to show that for all the flaws and shortcomings you can point out about Apple products, their user experience is still miles ahead of the competition for the people who are willing to shell out those handsome margins to buy them.

Which I think says a lot more about the competition (or the lack thereof rather) than it does about Apple.

I do think as services become s larger percentage of Apple’s revenue there’s going to me more scrutiny of exactly what makes up those services. John Gruber has been quite vocal that Apple’s free iCloud storage needs to be increased. On one of his podcasts a month or two ago he and Ben Thompson were wondering out loud if Apple should be bragging about services revenue when so much of it comes from IAP from crappy games and paying for iCloud storage because Apple is so stingy with it. And just this week Daniel Jalkut and Manton Reece (Mac/iOS developers and former Apple employees) were discussing on their podcast how Apple should reduce the 30% App Store cut it takes to 15%. Jason Snell mused that he’s kind of depressed about how much attention services is getting, that to him it’s not a product like an iPhone or a Mac is.

I think this is going to be a source of contention but now that Wall Street sees the growth in services they’re going to want to see it continue. Personally I treat something like Apple Music or the new TV content Apple is working on or even Apple Pay differently than I do iCloud storage, AppleCare or the cut Apple takes from App Store purchases/subscriptions. The former I think of as products, the latter as services. I want to see the services category grow more from the former than the latter. And just because Apple at one point decided their cut of App Store purchases would be 30% doesn’t mean it has to be forever. With Apple finding other ways to increase service revenues perhaps they could reduce their App Store cut to 15% across the board. And increase the free iCloud tier to 10GB.
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Did Apple actually breakout the numbers for the watch? That's the benchmark of a successful product.

I guess Microsoft’s Surface isn’t a successful product because they’ve never provided sales figures for it. Same with Amazon Prime as they rarely provide figures on how many people are signed up.

Honestly I wish Apple stopped providing sales figures for all their products. Only give Wall Street the absolute minimum necessary to file a 10-Q/K.

 

[Abazigal]

I do think as services become s larger percentage of Apple’s revenue there’s going to me more scrutiny of exactly what makes up those services. John Gruber has been quite vocal that Apple’s free iCloud storage needs to be increased. On one of his podcasts a month or two ago he and Ben Thompson were wondering out loud if Apple should be bragging about services revenue when so much of it comes from IAP from crappy games and paying for iCloud storage because Apple is so stingy with it. And just this week Daniel Jalkut and Manton Reece (Mac/iOS developers and former Apple employees) were discussing on their podcast how Apple should reduce the 30% App Store cut it takes to 15%. Jason Snell mused that he’s kind of depressed about how much attention services is getting, that to him it’s not a product like an iPhone or a Mac is.

I think this is going to be a source of contention but now that Wall Street sees the growth in services they’re going to want to see it continue. Personally I treat something like Apple Music or the new TV content Apple is working on or even Apple Pay differently than I do iCloud storage, AppleCare or the cut Apple takes from App Store purchases/subscriptions. The former I think of as products, the latter as services. I want to see the services category grow more from the former than the latter. And just because Apple at one point decided their cut of App Store purchases would be 30% doesn’t mean it has to be forever. With Apple finding other ways to increase service revenues perhaps they could reduce their App Store cut to 15% across the board. And increase the free iCloud tier to 10GB.

10 gb feels like it would still be insufficient for most users. The bulk of that storage is likely going to photos and backups. So either Apple gives everyone 50 gb for free (and eat up the cost) or they increase the free tier to a point which is still not enough for their user base (in which case nothing has changed and the criticism still continues).

I don’t know what the right cut for the iOS App Store ought to be either. Though with Apple removing affiliate revenue, they can and probably should start reducing their cut of the earnings.

 

[Keirasplace]

At least Elon Musk is trying to innovate, what innovator isn't a little bit eccentric, I mean look at Steve...

Hard to compare Apple with social media CEOs they are providing a service, not manufacturing anything. Not a fair comparison.

Innovate what, he took control of all the companies he "lead", he's good at marketing and that's why he's brought on board usually. There is a lot less innovation and a lot more peacock strutting in Musk than in Jobs; Musk should often **** and let the product speak for itself.

 

[Rogifan]

10 gb feels like it would still be insufficient for most users. The bulk of that storage is likely going to photos and backups. So either Apple gives everyone 50 gb for free (and eat up the cost) or they increase the free tier to a point which is still not enough for their user base (in which case nothing has changed and the criticism still continues).

I don’t know what the right cut for the iOS App Store ought to be either. Though with Apple removing affiliate revenue, they can and probably should start reducing their cut of the earnings.

I think they should. They’re going to start making money from the TV stuff they have in the works and I wouldn’t be surprised if they’re also working on a subscription news/magazine product. Let things like that be the growth driver of services. And if they go cross-platform then investors can stop fretting over Apple services all being tied to iPhone.

 

[CreeptoLoser]

At least Elon Musk is trying to innovate, what innovator isn't a little bit eccentric, I mean look at Steve...

Hard to compare Apple with social media CEOs they are providing a service, not manufacturing anything. Not a fair comparison.

Am not really impressed with Elon’s idea of innovation.

 

[Abazigal]

At least Elon Musk is trying to innovate, what innovator isn't a little bit eccentric, I mean look at Steve...

Hard to compare Apple with social media CEOs they are providing a service, not manufacturing anything. Not a fair comparison.

And look at the state of Tesla when you don’t have the equivalent of a Tim Cook there to help manage operations. The best ideas are useless when you can’t get your product out the door and into the hands of paying customers.

Tim may not be reinventing entire markets like Steve, but this doesn’t mean the work he does is any less crucial.

 

[Sackofnickels]

Cooks words are spoken by a person who sells a desktop with four year old hardware that is four generations behind processor wise in some products.
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And look at the state of Tesla when you don’t have the equivalent of a Tim Cook there to help manage operations. The best ideas are useless when you can’t get your product out the door and into the hands of paying customers.

Tim may not be reinventing entire markets like Steve, but this doesn’t mean the work he does is any less crucial.

How could you possibly compare Tesla to Apple?

 

[Abazigal]

How could you possibly compare Tesla to Apple?

Why can’t I? People are likening Elon Musk to Steve Jobs, and if you want to praise Tesla for the things that they supposedly are doing well, it’s worth also pointing out the areas they aren’t fairing so well in.

Most notably - turning a profit. Rumours suggest that Tesla might be at risk of running out of cash soon. This is one engine that just might sputter and die out before it even has a chance to get off the ground.

 

[dilbert99]

Properly priced? Consumers? Are you speaking of the 200+ million repeat satisfied consumers who purchase priced-right outstanding Apple products year after year after year?

Or the couple of dozen never-happy who hang out tech forums without the benefit of a decent paying job to pay for what the above 200+ million routinely purchase?

So I am not allowed to object to the obscene profits that Apple makes at the expense of their customers?
There will come a day when the price of the iPhone will come down.

Also don't assume you know what my monetary position is, just because one complains doesn't mean one can't afford it.

 

[Abazigal]

So I am not allowed to object to the obscene profits that Apple makes at the expense of their customers?
There will come a day when the price of the iPhone will come down.

Also don't assume you know what my monetary position is, just because one complains doesn't mean one can't afford it.

I guess I just don’t see what the uproar is over it at the end of the day. Apple puts out a product, charges a price they think the market can bear, and the consumers vote with their wallet. This isn’t some pharmaceutical company jacking up the price of some essential life-saving drug by a hundred times. Nobody is going to die if they can’t afford the latest iPhone. And I honestly don’t find Apple products all that expensive relative to the rest of the competition, especially when it comes to the utility they provide.

 

[I7guy]

I guess I just don’t see what the uproar is over it at the end of the day. Apple puts out a product, charges a price they think the market can bear, and the consumers vote with their wallet. This isn’t some pharmaceutical company jacking up the price of some essential life-saving drug by a hundred times. Nobody is going to die if they can’t afford the latest iPhone. And I honestly don’t find Apple products all that expensive relative to the rest of the competition, especially when it comes to the utility they provide.

I was thinking the same exact thing. Apple is making “obscene profits at the expense of their customers”?

If that’s your thought get an android, buy a dell, get Samsung wear.

Because of the support of the phones I find Apple products to be very cost effective.

 

[citysnaps]

So I am not allowed to object to the obscene profits that Apple makes at the expense of their customers?
There will come a day when the price of the iPhone will come down.

Also don't assume you know what my monetary position is, just because one complains doesn't mean one can't afford it.

You can object based on your opinion all you want, in line with your personal financial situation.

But concluding a product isn't "properly priced from a consumer point of view" is saying much more, as if you are speaking for consumers in general. Which is fine if you've conducted a survey properly sampling the consumer space.

In the meantime, I'll go with the 200+ million consumers who repeatedly open their wallets to purchase outstanding Apple products year after year after year.


"...to the obscene profits that Apple makes at the expense of their customers"

Obscene profits? Hardly. Apple's GPMs at around 38% are within industry norms and less than Samsung's (around 46%).

 

[scubachap]

Apple are at a very interesting juncture. I do wonder if they're becoming 'fragile', in that this sort of success is difficult to maintain without a stream of new and exciting products be they physical or services. If they manage to keep pushing out innovations we all want then they'll be fine but I've been surprised by their endless refining (milking?) of a stable of physical products which seem to me to be 5-10 years old and pretty much predate Tim Cook.

Going forward I do think that their big problem is that even this cash pile can't buy both serendipity and the complacent stupidity of their competitors that got them here. Is an endless focus on cost control and the clever ramping up of price points under Tim Cook going to be enough? For the first time in 30 odd years I now feel I'm being done like kipper when I pay for their hardware...

Where now Apple, where now?

 

[Radon87000]

I was thinking the same exact thing. Apple is making “obscene profits at the expense of their customers”?

If that’s your thought get an android, buy a dell, get Samsung wear.

Because of the support of the phones I find Apple products to be very cost effective.

There is no tablet alternative on Android.

 

[Soccertess]

Selling affordable products with current hardware would be even better.

current hardware? better quality hardware!

 

[pmore]

Financial returns are simply the result of Apple's innovation, putting our products and customers first, and always staying true to our values.

Lies. You don't put your products and customers first. Not with bad products you've been releasing lately and anti consumer practices.

 

[I7guy]

There is no tablet alternative on Android.

Get a surface pro then.

 

[mi7chy]

Some of the greedy ways Apple got to $1T. Let's not forget the secret throttling.

https://techcrunch.com/2018/08/04/the-greedy-ways-apple-got-to-1-trillion

 

[Rogifan]

Apple are at a very interesting juncture. I do wonder if they're becoming 'fragile', in that this sort of success is difficult to maintain without a stream of new and exciting products be they physical or services. If they manage to keep pushing out innovations we all want then they'll be fine but I've been surprised by their endless refining (milking?) of a stable of physical products which seem to me to be 5-10 years old and pretty much predate Tim Cook.

Going forward I do think that their big problem is that even this cash pile can't buy both serendipity and the complacent stupidity of their competitors that got them here. Is an endless focus on cost control and the clever ramping up of price points under Tim Cook going to be enough? For the first time in 30 odd years I now feel I'm being done like kipper when I pay for their hardware...

Where now Apple, where now?

This has been the story of Apple (at least Apple 2.0). Everyone constantly worried. As if Apple is just some trendy fad or popular boy band people are going to fall out of love with any day now. Apple’s biggest product is one that most people (in the developed world) have and can’t live without. I have yet to see anything that’s going to replace the smartphone anytime soon. And so far all the so-called iPhone killers haven’t killed anything except maybe other so-called iPhone killers. Just 6 months ago or so my Twitter feed was full of tech analysts proclaiming voice is the future, talking up smart speakers left and right and fretting about Siri and Apple being behind in AI. Now it’s as if smart speakers don’t exist. Reminds me of the way everyone talked up bots one spring/summer and then they were never heard about again. I have no problem with Apple milking the iPhone while they’re working on the future. And I’m not worried because the smartphone isn’t going anywhere anytime soon.

 

[Sabelonada]

Someone may have already pointed this out, but no iMac ships with both a T2 chip and a Fusion Drive.

And I doubt we’ll ever see one, too. Apple’s seemingly done including hard drives in new designs.

I realize that there is not yet a product which ships with both a T2 and a Fusion drive. However I don't discount the possibility of such a combination in the iMac. The main reason I would think Apple would discontinue offering a Fusion drive is that the cost to implement is too high. They always charge a premium for their SSD offerings.

I am concerned the next iMac will feature soldered storage and perhaps soldered memory. Apple seems to be offering computing appliances and not computers.

 

[apolloa]

I’m sure Cook measures success in how much he can lobby government for changes to favour Apple, how much money he can make personally by sellers no those over valued shares, oh and how much he can move acceptance of the LGBT community under Apples name, although he can certainly do that just not sure why he does it under the Apple brand name.

He certainly doesn’t measure it with customer satisfaction. IMO, he really isn’t a patch of Steve and just comes across as a bean counter, Steve innovated. Definitely a difference between them.
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Even if you don’t consider the Touch Bar an innovation, which it is and the T chip behind it clearly was, why would you try to frame it as though that’s what he said was innovation? What about the Ax chips, by far the industry leaders? What about FaceID, a class leading technology? You set up a strawman and knocked it down.

Face ID is nothing more then a shrunken Xbox Kinect. Although Apple designs the A chips. Most of Apples tech is developed by other companies that Apple just buys.
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I see Marco Arment is back to constant doom and gloom. Now fretting over Apple’s focus on services. And someone responded to one of his tweets with a comment about lightning cables getting more and more flimsy. One, I haven’t experienced that (they seem the same to me as they always have been). Two this theory makes no sense. Purposely skimping out on product quality makes no sense as it makes it more likely people will chose NOT to buy more of your products in the future. It’s not like Apple has a gun to people’s head forcing them to own Apple products. And I doubt most people are that invested in iOS ecosystem that they couldn’t leave if they wanted to. Macs might be a different story but even there my guess is the percentage of people who will never use anything but macOS (like John Gruber) is quite small.

It’s not the product quality, that has always been good, despite design flaws, it’s the software. The one thing they literally make themselves, that exclusively runs in that hardware designed by them, and it’s a buggy mess, or things stop working.
I think that’s where the lack of quality aspect comes from, dose for me anyway. Their services seem alright to me. Although with Apple Music they for some unknown unexplained reason show tracks on an album that you can’t actually play? It comes across as messy and a bit amateur.

 

[ThunderSkunk]

Neat. If I could make the same products and not update them for half a decade at a time and then just eliminate features when I do, and keep raking in the cash to the tune of a trillion dollars, I'd have to be pretty brave to try doing something new and unproven.

Who knew a tech stock could do so well being so slow to innovate. I wonder how long this can go on before perception catches up and becomes a serious liability.

 

[I7guy]

I’m sure Cook measures success in how much he can lobby government for changes to favour Apple, how much money he can make personally by sellers no those over valued shares, oh and how much he can move acceptance of the LGBT community under Apples name, although he can certainly do that just not sure why he does it under the Apple brand name.

I'm sure this is commonly what is known as hyperbole.

He certainly doesn’t measure it with customer satisfaction. IMO, he really isn’t a patch of Steve and just comes across as a bean counter, Steve innovated. Definitely a difference between them.

More hyperbole. Touch id, face id, w1 chip, homepod, 64 bit and apple watch. And that's on the hardware side.

Face ID is nothing more then a shrunken Xbox Kinect. Although Apple designs the A chips. Most of Apples tech is developed by other companies that Apple just buys.

If face id is a shruken xbox kinect, what does make the unreliable finger print readers the android vendors rushed to implement after the 5s?

It’s not the product quality, that has always been good, despite design flaws, it’s the software. The one thing they literally make themselves, that exclusively runs in that hardware designed by them, and it’s a buggy mess, or things stop working.
I think that’s where the lack of quality aspect comes from, dose for me anyway. Their services seem alright to me. Although with Apple Music they for some unknown unexplained reason show tracks on an album that you can’t actually play? It comes across as messy and a bit amateur.

Then what does this make windows? Microsoft has literally been doing this for decades and windows has more holes than swiss cheese.

Neat. If I could make the same products and not update them for half a decade at a time and then just eliminate features when I do, and keep raking in the cash to the tune of a trillion dollars, I'd have to be pretty brave to try doing something new and unproven.

Who knew a tech stock could do so well being so slow to innovate. I wonder how long this can go on before perception catches up and becomes a serious liability.

You're entitled to your opinion, but if apple is slow to innovate the competition is innovating at an even slower pace. Unless you believe innovation is slapping an sd card reader in a phone.

 

[apolloa]

On what premise? He is kind and he has led Apple to amazing growth.

So you know Cook personally then? Because that is the ONLY way you can claim he is kind. That is not an assumption you can make by reading the media or watching interviews.
He has also led the stocks and profits to ‘amazing growth’, not the company.
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Although I did struggle to understand your spelling - I got there in the end. So I will attempt to reply to your condescending comment.

Likewise, just because you are happy with Apples decisions, doesn't mean to majority do.
93% Satisfaction.. which includes mums, students, and all kinds of users, like my 8 year old cousin. She's happy with her angry birds - so; so are her parents.

I was talking about professionals and legacy Apple users. And no, I'm not alone. Scour these forums for feedback and discussions regarding Apples decisions (it's the search feature in the top right of the webpage).

To shut down my perspective is to shut down half of MacRumors. That something you can do successfully with your sassiness boo?

This 93%, is that global customers or as I suspect, US customers? And where does this data come from, an independent survey or Apple themselves.

 

[I7guy]

So you know Cook personally then? Because that is the ONLY way you can claim he is kind. That is not an assumption you can make by reading the media or watching interviews.
He has also led the stocks and profits to ‘amazing growth’, not the company.
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This 93%, is that global customers or as I suspect, US customers? And where does this data come from, an independent survey or Apple themselves.

Stocks and profits represent where the company went, not the other way around. You don't like the company, fine, but that doesn't mean the universe agrees with you.