Apple's Cook open to partnering with e-commerce behemoth Alibaba

Apple (NASDAQ: AAPL) CEO Tim Cook indicated he is open to working with Chinese e-commerce giant Alibaba and its billionaire founder Jack Ma, who expressed an interest in partnering with the iPhone maker in mobile payments.   

Both executives spoke Monday night at the Wall Street Journal Digital Live conference, where Cook disclosed that more than 1 million credit cards were activated on the Apple's new Apple Pay service within 72 hours of its launch last week.

"I'm very interested in that," Ma said when asked if it made sense for his company's Alipay Wallet mobile system to work with Apple Pay, according to Bloomberg. "As always, a good marriage needs both sides hard working. I respect Apple and respect Tim very, very much."

Cook spoke later and was asked about the possibility of working together with Alibaba, which recently had its initial public offering.   "We're going to talk about getting married later this week," Cook said, according to Bloomberg. "I love what he's done, I think he's a brilliant guy. I think he has brilliant people at the company so if we can find some areas of common space, I love it. I love partnering with people like that." However, Cook did not specifically say Apple would work with Alibaba in payments.

Cook also responded to reports that drug store chains CVS and Rite Aid appear to have decided to stop supporting Apple Pay as well as other payment methods that use Near Field Communications technology. Neither company had officially joined Apple Pay but customers were able to use the service before it was disabled at the two chains over the weekend.

The Apple chief called the developments a "skirmish," adding that, "We're just getting started but the early ramp looks fantastic," he said.

"You are only relevant as a retailer or merchant if your customers love you," he said. "It's the first and only mobile payment system that's easy, private and secure."

CVS hasn't publicly explained its decision or responded to requests for comment, according to multiple reports. Rite Aid spokeswoman Ashley Flower defended the company in a statement to Bloomberg BusinessWeek. "We are continually evaluating various forms of mobile payment technologies, and are committed to offering convenient, reliable, and secure payment methods that meet the needs of our customers," she said.

Apple has deals with the six biggest credit-card issuers, accounting for around 83 percent of credit-card transactions in the U.S.  Apple Pay works at around 220,000 stores and lets users pay for goods via NFC.

CVS and Rite Aid support another mobile payments system called the Merchant Customer Exchange (MCX). Shortly before Apple unveiled Apple Pay in September, MCX unveiled the brand name CurrentC for its mobile wallet, loyalty and offers platform, which it will launch in 2015 at around 110,000 retail locations, including Walmart, Best Buy and Target. CurrentC does not use NFC and instead will use digital QR codes.

Turning to the iPhone, Cook said the device will probably comprise the majority of the company's revenue and profit for the next three to five years.

"Smartphones are going to keep growing" in terms of sales as a category, Cook said. "I am really proud of the products this year." Apple has said it sold more than 10 million units of the new iPhone 6 and 6 Plus after the gadgets' debut sales weekend, surpassing the 9 million units Apple sold last year during the opening weekend of the iPhone 5s and 5c.

Cook was also asked whether Apple will develop an even lower-cost iPhone for Africa or other emerging markets. He gave a variation on a standard refrain, saying, "We'll go as low as we can while maintaining the customer experience."

Research firms like Gartner and CCS Insight think much of the mobile phone shipment growth that will occur in 2014 will be driven by low-cost smartphones.

For more:
- see these three separate articles from the WSJ (sub. req.)
- see this Bloomberg article
- see these two separate Reuters articles
- see this The Verge live blog
- see this TechCrunch article

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