Apple (NASDAQ:AAPL) CEO Tim Cook said he thinks the global smartphone market will continue to grow significantly over the next few years and that Apple's iPhone business will benefit from that. However, Cook did not directly address whether Apple will introduce a cheaper iPhone for emerging markets, but he said the company will continue to make great products and that "The only thing we'll never do is make a crappy product."
In a wide-ranging interview at the Goldman Sachs Technology and Internet Conference, Cook said Apple is excited about the smartphone industry. "Frankly speaking, I see a wide-open field," he said. Cook noted that the market reached 700 million units last year (the estimate of research firm Strategy Analytics) and he said the market is expected to double during the next several years. "I see a market that is incredible to be in," he said. "Apple has enormous momentum. We have built an ecosystem that is the best at customer experience on the planet."
In its last fiscal year Apple sold around 125 million iPhones, and Cook said Apple's iPhone business will keep expanding, including by adding more carriers. However, financial and industry analysts have persistently questioned Apple and Cook about whether the company needs to introduce a cheaper iPhone model for emerging market customers who cannot afford top-end smartphones like the iPhone. Cook responded, as he has in the past, that Apple has lowered the price of its older iPhone 4 and 4S models, and that in its last quarter demand for the iPhone 4 outstripped Apple's expectations.
Recent rumors have indicated Apple is working on a cheaper iPhone device. Cook pointed out, as he has before, that Apple was able to lower the cost of its iPod products over time and still he said the company was still able to make those iPods a "great product."
"The only thing we'll never do is make a crappy product," he said. "That's the only religion we have. We must do something great; something bold, something ambitious. We want the customer to be at the center of it. We want to enrich customers' lives."
Cook also addressed concerns that the company is running out of new hit products that redefine product categories, like the iPhone and iPad. There have been numerous reports, many over the past year, that the company is working on a new TV product. Cook has addressed the rumors obliquely in the past--in a December interview with NBC Nightly News anchor Brian Williams, Cook said that developing a living room product is "an area of intense interest. I can't say more than that."
Cook said the culture of innovation at Apple has never been stronger. "The innovation is so deeply embedded in Apple's culture," he said. "The boldness, the ambition, the belief that there are no limits. The desire among our people to not just make good products but to make the very best products of the world." Cook added that innovation is driven by the skills and leadership at Apple, and that the company is not a hardware company but one that marries hardware, software and services.
"The reality is that the model that grew the PC industry, where companies specialized in a thing and then somebody did some integration work in the end, that model is not working for what consumers want today," he said. "Consumers want this elegant experience where the technology floats to the background and the customer is at the center of that experience."
Interestingly, and perhaps in an allusion to a potential TV product, he said that because Apple is not a hardware company "there are other things we can do to have revenues flow."
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