Live: Apple’s Tim Cook speaks by Philip Elmer-DeWitt @FortuneMagazine February 14, 2012, 8:25 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons The man who took over from Steve Jobs makes a rare public appearance In a much anticipated follow-up on the 2008 Q&A that helped seal his reputation with investors (see here), Tim Cook takes questions at a Goldman Sachs technology conference. Apple AAPL is providing a live streaming audio webcast here. [Transcript here.] We’re going to assume you are listening in real time or catching the event after the fact, and will keep our comments to a minimum. The main news was no news: Cook did not announce a stock buy-back, split or dividend. All times below are Eastern. 3:30 p.m. It was scheduled to start at 12:30 Pacific. Apparently we’re running late. 3:34 p.m. Bill Shope, who introduces Cook, is Goldman Sach’s chief Apple analyst. Cook’s dry humor as he delivers the safe harbor statements is perfectly in character. 3:36: Shope launches straight into the Chinese working conditions question that’s much in the news. Cook’s initial remarks are boilerplate, but leavened a bit with the fact that he once worked in a paper mill, which is news to me. Cook’s statement of Apple’s principles feels heartfelt. Finally he says what so few press reports have: No one in the industry is doing more than Apple. Also heartfelt: “We think the use of underage workers is abhorent.” It’s a firing offense, he says. The details about checking for the presence of fire extinguishers in cafeterias and the monthly audits of overtime hours are new. 3:45: Shope admits to being surprised by the number of iPhones shipped in December. Asks when Apple will run into the so-called “law of large numbers.” Cook gets laughs when he describes 37 million iPhones with his usual understatement as “a pretty decent quarter.” Tries to put in context of “jaw dropping industry,” and the size of the opportunity for Apple. 3:48: Shope asks how Apple is going to break into the emerging markets. Cook points out that 25% of the 1 billion of the projected smartphone market of 2015 will come from China and Brazil. Cook’s view is not conventional wisdom: he believes that everyone in every market wants the best product. He also believes that pre-paid markets aren’t necessarily pre-paid forever. Points to the surprising number of Chinese have moved to post-paid, where Apple gets to take advantage of subsidies. 3:52: Shope switches to whether the halo effect works in developing markets. Cook’s description of the halo effect of the iPod is standard stuff, but he makes a subtle point. The halo effect was created in developed markets. Didn’t work nearly as well in emerging markets because people were already getting music through their phones. But iPhone is changing that. Makes sense that the iPhone is creating a halo effect in emerging markets for the iPad. 3:55: Cool factoid: Revenue from emerging markets in 2007 was $1.4 billion. In 2011 it was $22 billion. 3:56: The iPad. Why has it ramped up so quickly? Cook rattles off some good numbers, which I couldn’t keep up with, about how much faster it ramped up than the previous products. Makes an interesting point that the iPad stood on the shoulders of previous products: iTunes, the OS, etc. He gave one to his mom and she knew how to use it just from watching the commercials. Nice touch. Fastest adoption across a wide range of users than he’s ever seen. 3:59: Shope asks the big question: Does Cook think it replaces the PC. For Cook, it quickly became 80% to 90% of his consumption. Feels even more strongly today than at launch that the tablet market will be bigger than the PC market. Gets laugh when he points out that if you invited everybody who is working on a cool PC app to a meeting, nobody would show up. 4:02: Pricing, says Cook, is rarely the most important thing. Buy a cheap product and you feel pleasure when you save money, but when you get home and use it, the joy is gone. (Gets laugh.) People at the end of the day, they want the great product. (That’s a pretty succinct statement of Apple’s philosophy.) I love competition as long as people invent their own stuff. (Another succinct summary.) 4:05: How cannibalistic is the tablet to the PC? Cook: iPad has cannibalized some Mac sales (that’s not new). Talks about Apple’s “higher order bit.” Geek talk! Admits that he doesn’t know anything about politics. That’s new but not surprising. 4:07: Shope is asking the big question: why hasn’t Apple bought back stock or issued a dividend. Cook is ducking the question, talking about the billions Apple has spent on retail, data centers, etc. But yes, we still have a lot (of cash). I would say we’re judicious. We spend our money like it’s our last penny. Investors don’t want us to act like we’re rich. Repeats the remark about “not religious” and “in very active discussions at the board level.” So no announcement today. 4:10: Shope follows up. Have the discussions gotten more frequent in the last year. It is being discussed more now, and in greater detail, because the balance has risen. Asks for patience “so we can do this in the most deliberate way.” 4:11: Shope moves to Apple’s TV plans. Cook won’t talk about future products, naturally. Sold 3 million Apple TVs last year. Sold 1.4 million last quarter. The usual reasons why they still call it a hobby — So you don’t think the leg of that stool is the same length as the others. Apple doesn’t do hobbies as a general rule, however. So despite the barriers in the market, we always thought there was something there, so that if we kept following our intuition and pulling that string, we might find something. 4:14 Siri and iCloud. Where do they fit in? Surprisingly (to me) Cook thinks Siri and iCloud are profound. Invokes Jobs’ old plan to make PC or Mac the center of digital life. The idea that iCloud turns that on its head is not new. Describes syncing as a “hair pulling exercise.” 100 million users of iCloud is, I believe, a new number. Decribes it as a strategy for the next decade. On Siri starts to hint that it might replace the mouse and the keyboard. Then multitouch. Siri is another profound change of input. “I think we’ve always wanted it.” Doesn’t run separate P&Ls on that (profit and loss). But both go in the profound categories. Claims you will talk to your grandchildren about them. Hmmm. 4:18 last question: What will your leadership will bring to Apple and what will stay the same. Cook ducks the first and focuses on the second part. “I’m not going to witness or permit” the slow undoing of Apple’s unique culture. Doing a few things and doing them well. Only going into markets where Apple can make a significant contribution to society. Excellence in all things. Those are the things that make Apple a magical place where people want to do their best life’s work. Nothing better for him than to go to places and seeing people using iPods, iPhones, iPads. Those are the things he’s holding onto. 4:20 That’s a wrap. Big applause. Paul Simon’s Graceland fades in.