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In his own words: Tim Cook on Apple earnings and more

Macworld Staff | Jan. 25, 2013
What Tim Cook said about Apple, the first quarter of 2013, the iPad, and more in the company's first quarter earnings call.

I think overall our team did just a fantastic job ramping a record number of new products during the quarter. We did have significant shortages due to robust demand on both iPad mini and both models of the iMac that persisted the entire quarter, and we are still short of both of those today, as a matter of fact. Additionally, supply of iPhone 5 was short to demand until late in the quarter, and iPhone 4 was short for the entire quarter. We believe that we can achieve a supply/demand balance on iPad mini during this quarter, and on iPhone 4 during this quarter. On iMac, we're confident that we're going to significantly increase the supply, but the demand here is very strong, and we are not certain we'll achieve a supply/demand balance during the quarter.

In terms of cannibalization and how we think about this: I see cannibalization as a huge opportunity for us. One, our base philosophy is to never fear cannibalization. If we do, somebody else will just cannibalize it, and so we never fear it. We know that iPhone has cannibalized some iPod business, it doesn't worry us that it's done that; we know that iPad will cannibalize some Macs--it doesn't worry us.

On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is. And I think it is clear that it's already cannibalizing some, and I think there's a tremendous amount of more opportunity there and as you know I've said for two or three years now that I believe the tablet market will be larger than the PC market at some point and I still believe that. And you can see by the growth in tablets and the pressure on PCs that those lines are beginning to converge.

I think the other thing for us--maybe not for others but for us--is that if somebody buys an iPad mini or an iPad, and it's their first Apple product, we have great experience through the years of knowing that when somebody buys their first Apple product, that a percentage of these people wind up buying another type of Apple product. If you remember what we had termed the "halo effect", for some time with the iPod with the Mac, we're very confident that that will happen and we're seeing some evidence of that on the iPad as well.

And so I see cannibalization as a huge opportunity.

iPhone futures

The thing to consider on iPhone is that in the year-ago quarter, we built 2.6 million units of channel inventory, [for one thing] because we did the China launch in the March quarter, instead of in the previous quarter. And so the underlying sell-through from the year ago quarter was 32.5 [million]. The sell-in was 35 [million] as you can probably see on the sheet in front of you.


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