Saturday 23 July 2016

'At Apple we always keep raising the bar'

Tim Cook is chief executive of Apple - the richest, most powerful technology firm in the world. He also happens to be a fan of Ireland. In a wide-ranging interview, Technology Editor Adrian Weckler talks to him about privacy, diversity, Chinese factories, the future of cars and why he is giving all his money away

Published 15/11/2015 | 02:30

Apple chief executive Tim Cook at Independent House last week
Apple chief executive Tim Cook at Independent House last week

Walking through the corridor to our interview room, Tim Cook stops to gaze at a framed photo on the wall.

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"Wow," he says.

The photo, by Irish Independent photographer Mark Condren, is a famous close up shot of a tearful Sean Quinn at a 2012 rally in Cavan.

"Such emotion there," says Cook, who remains looking at the photo for another 30 seconds, transfixed.

For a man who presides over the world's biggest technology company - where form and platform would appear to be everything - Cook seems fascinated with basic content.

He lingers for a while longer at an old photo book showing pictures of Dublin during the 1916 rising.

Later, when showing me a few things on his company's just-launched iPad Pro, he heads right for a recently launched New York Times daily digest service he's impressed with.

"This is really nice, have you seen this?" he says. "It's a collection of what the editor thinks are the most interesting stories of the day. And it goes deep."

An interest in the substance and art of things, rather than just the way they are consumed, may provide a clue as to why Apple - and Cook - continue to reign supreme in the world of our personal devices.

It's why his new iPad Pro is pitched as much to artists, photographers and graphic professionals as it is to ordinary laptop users. It's why the company's biggest advertising campaigns lately have centred around real photos taken with iPhones.

And it's why many of the company's new services - from Healthkit to Homekit to Apple Pay - are being backed up with massive investment budgets around content and accessibility.

Whatever way you look at it, Cook's company is currently rippling with new products. In the last 18 months, Apple has announced several major new product categories. More, such as an electric car, may be on the way.

But this year, the most talked about of new Apple products has probably been its smartwatch (called 'Watch'). The company has not disclosed how many Watch units have been sold since its release earlier this year. For some analysts, this is a sign of tepid demand. But Cook says that Apple is expecting "huge" sales this Christmas.

"I don't even look at what the analysts say," Cook says with a grin. "But I think it's going to be a huge holiday season. We're extremely optimistic. We shipped the Watch first in the June quarter and we sold a lot. We sold even more than that in the September quarter. And we're looking for a big holiday season."

While many have looked at the Watch as a device made for people who don't wear traditional watches, Apple has taken a broader view.

It has invested as heavily in trying to make the devices fashionable as much as they are technically accomplished. Deals with luxury brands such as Hermes (for leather straps), as well as €11,000 gold editions of the device have sought to help this along.

However, the Watch appears to be still at an early point of gaining traction with everyday customers. This doesn't dim Cook's optimism for the product.

"I just feel confident that we're going to sell a lot," he says. "We announced new cases and bands in September along with Watch OS2. We're already shipping our second version of the Watch operating system. And we've got almost 1,500 native apps from developers for the Watch. Including the Irish Independent."

Cook delivers this in calm, measured tones. He speaks quite slowly and deliberately, often looking into the distance or down at his hands as he gathers thoughts together. There is little of the hyper energy or salesmanship that is often the hallmark of big company bosses.

So he doesn't bat an eyelid when I ask him whether Apple is making an electric car. But he does smile.

"I don't have anything to announce about our plans," he says. "But I think there's some significant changes in the automobile industry over the next several years with electrification and autonomous driving. And there's a need for a focus on user interface. And so I think there's a lot of changes that will go on there."

And is Apple interested in jumping in to help effect those changes?

"It's an area we're interested in from the user interface point of view," he says. "As you know, we've made a product called CarPay to bring the iPhone experience into your car. We've recognised that the user interface with a car is not up to the expectations of our customer. And so we wanted to help the automobile manufacturers remedy that and have our customers have a seamless experience between in the car and out of the car."

If Apple is actually building a car, Cook might not be expected to say anything about it at this point. But the industry press - both tech and automotive - have been full of reports saying as much in recent months. Tesla founder Elon Musk went so far as to publicly mock Apple for hiring engineers that Tesla had fired. (He later struck a conciliatory tone, tweeting that he "loves" Apple's products and that he's "glad they're doing an EV" [electric vehicle].

If Apple does make a car, it's likely that much of the manufacturing, as well as the engineering and design, might happen in the US.

The company appears to be at a crossroads in terms of its manufacturing strategy. While conventional wisdom has it that manufacturing at scale can only take place in China, Apple has announced plans to return some production back to the US. (If so, it will mean that Cork, which still makes iMacs, will no longer be the sole Apple-owned manufacturing facility left in the world.)

And it's not just the location of its manufacturing that the company has been considering. Apple has had to take several tough reports on the chin about conditions experienced by workers at some of its outsourced manufacturing facilities, mostly in China.

In some instances, workers making iPhones have been denied basic health and safety features, have been overworked, or have been employed below the legal working age.

Is Cook now happy that things have improved? Is he satisfied that Apple's vast supply chain is meeting with the kind of standards he says he wants?

"We're never satisfied in this regard," he says. "What I would say is that we've seen significant and marked and measurable progress over the last several years, continuously. We audit more than anyone. If our audits get passed, we raise the bar so that we continue to improve and improve.

"So we don't view labour standards and great working conditions as a static position. We want them to be constantly improving. And so every time we audit we find something. And we learn something. And we go back and raise the bar and make things better.

"What I am convinced over is that the partners that we're with are partners that truly believe as we do - that everyone deserves safe working conditions and to be treated with human dignity and respect.

"And I feel like we can be proud over the progress that we've made."

Apple's ties to some of the Chinese companies previously criticised for sub-standard working conditions, particularly Foxconn and Pegatron, remain strong. But aside from improving workers' conditions, it is currently pushing them to convert over to renewable energy.

In all, Apple has a plan for 2,000 megawatts of 'clean' power to be created in China over the next few years, either itself or by its Chinese outsourcing manufacturers. Much of this will be based on solar energy, with 400 megawatts alone to be created by Foxconn.

This isn't tokenistic. When it comes to saving the world through renewables, Apple has serious aspirations. It spends far more than it might on kitting out its facilities with the latest carbon-saving materials. Its Cork facility in Hollyhill is a case in point, with special glass walls that heat or cool the building, rainwater-harvesting equipment to save water and solar panels that heat most of the local cafes hot water.

This is something that Cook is personally interested in. He frequently talks about leaving the world in better shape than it is today.

But while getting Apple closer to a "carbon neutral" position is one way of leaving a mark, Cook also believes in divesting himself of his own money. He is the latest in a line of high profile global business and technology executives to declare that he will give away his fortune to philanthropic causes.

"Yes, except for putting my nephew through school," he says.

Has he signed the Giving Pledge, the scheme set up by Warren Buffett and Bill Gates for billionaires to publicly promise to give away over 50pc of their riches to good causes?

"You know, I don't think I have enough money to sign the Giving Pledge," says Cook. "I think that's for people who have a lot of money. They haven't asked me to do that. But I've signed a pledge to myself and that's more important to me than a pledge to someone else."

It's not really polite to ask someone what their net worth is, even when they're the head of one of the world's most powerful companies. With Cook, it also feels a little beside the point. What difference does it make whether he's worth $50m, $500m or $5bn? What difference will it make to the kind of products his company comes up with?

(Not everyone will agree. If you are one, Fortune Magazine has roughly estimated Cook's net worth to be somewhere in the region of $750m, once share options are taken into account.)

Cook isn't naturally disposed to talking about himself or whatever he'll do with his own money. Last week, he told an assembly of students from the Philosophical Society in Trinity College that he has been inclined to value his privacy "in an exaggerated way".

However, he made one large exception to his personal privacy rule. Last year, he made world headlines by writing an article about his sexuality.

"I've come to realise that my desire for personal privacy has been holding me back from doing something more important," he wrote in a Bloomberg piece.

"While I have never denied my sexuality, I haven't publicly acknowledged it either, until now. So let me be clear: I'm proud to be gay, and I consider being gay among the greatest gifts God has given me."

Cook's move garnered universal praise. It was hailed as a breakthrough moment for equality in business and corporate circles.

Since then, he has spoken several times on broader themes of diversity and equality. The kernel of his argument is one that many other tech companies now also make: diversity has become a vital issue for productivity.

"Diversity and inclusion are very important for us," he says. "From a business point of view, we need to be able to attract and retain talent from all walks of life, all sexual orientations, all races and all ethnic backgrounds. Otherwise we're not going to be successful."

Ireland, he says, is a case in point. This year, the country removed a ban on same sex marriages. Cook followed the referendum and was "thrilled" when it was passed.

"The [marriage equality] campaign here was so professional," he said. "It wasn't an antagonistic kind of campaign. I think everyone is to be complemented.

"This is another example where Ireland will be the ripple in the pond. I am thrilled about it. I think it will result in many other countries following. I give a lot of credit to the Irish people."

He also thinks it will actually help investment into the country.

"It will lead to many more businesses coming in," he said. "I think Ireland did itself a great service, not only because it's just and right, but also because it will attract more business."

For American companies, doing business in Europe is getting to be a tricky thing these days. American tech companies, in particular, are finding themselves in regulatory crosshairs more and more.

But there are some things that Europe doest best, according to Cook. One of them is privacy.

He says that he feels more comfortable in Europe when it comes to privacy issues than in other parts of the world, including the US.

"I do," he says. "I think Europe is leading the world on that topic and it's great. I feel right at home when I come to Europe and talk about privacy."

What is it he approves of in particular? Is it the recently introduced 'right to be forgotten', allowing individuals to have personal information removed from search engines?

"I wouldn't want to comment on that specific one. But I think, on a macro basis, it's the concept that all of us should have the right to our data, how it's used and where it's used. I think these concepts are powerful and have never been more important as the advancements in technology have enabled many things beyond what should occur."

When he talks about activities "beyond what should occur", Cook probably has a few specific tech company rivals in mind.

Earlier this year, he took some broad swipes against the business models pursued by some Silicon Valley competitors.

"When an online service is free, you're not the customer, you're the product," he wrote in a letter on Apple's website. "We don't build a profile based on your email content or web browsing habits to sell to advertisers. We don't 'monetise' the information you store on your iPhone or in iCloud. And we don't read your email or your messages to get information to market to you."

While no company was specifically referenced, it's fairly obvious that Cook was talking about Google and Facebook.

But Cook also left a bit in for governments and security agencies to ponder.

"I want to be absolutely clear that we have never worked with any government agency from any country to create a backdoor in any of our products or services," he wrote. "We have also never allowed access to our servers. And we never will."

This position is currently putting Apple and Cook on a collision course with the British government. Right now, London is putting a bill through parliament that could require companies such as Apple to insert a 'backdoor' access system that would allow security services to intercept communications on iMessage (and other messaging services such as Whatsapp). The proposed law is being introduced, says UK prime minister David Cameron, because allowing end-to-end encryption makes it too easy for terrorists and other bad people to set things up without fear of being disrupted.

Cook is having none of it. He has repeatedly warned that removing end-to-end encryption from everyday services such as iMessage would weaken security for ordinary people and leave them more vulnerable to being hacked, while villains retained access to encrypted messaging over other services.

He also thinks that the UK government will either change its mind on the issue, or be persuaded to do so by a combination of close parliamentary scrutiny and public interest.

"The UK government has been clear publicly that they are not seeking to weaken encryption," says Cook. "And so I take them at their word that they would not do that. And at the moment as you know, we encrypt iMessage end-to-end and we have no backdoor. And we have no intention of changing that. Any change made would contradict the UK government's view that they would not weaken encryption.

"And so I think that we'll work closely with them. And I have every faith that through this process of the next year, give or take a year, that the bill will become very clear."

But if they do pass it, has Cook considered what that would mean for iMessage?

"I'm confident that they would not pass a bill that would weaken encryption because I take them at their word for it," he says.

Despite the conflict over encryption, Cook appears to get on well with most individual European governments. In the last week, for example, he made time to talk to senior officials on visits to Ireland, Britain and Italy.

Here, that meant a meeting with the Taoiseach, Enda Kenny.

One of the things they may have discussed was the issue of a potentially adverse tax ruling about Apple that might soon be handed down from the European Commission. If such an event were to happen, Ireland, which is the subject of the investigation, might be compelled to collect billions in back taxes from Apple. (The EU says that Ireland provided Apple with illegal state aid through its taxation system, a charge that both Ireland and Apple flatly deny.)

Cook has said repeatedly that there was "no special deal" between Ireland and Apple over tax. He has also said that he has "every faith that the system, either initially or eventually, will find the same".

In Europe, many look at the European Commission as an entity that is fearless in tackling big business. In the US, there is a different view: the institution is often seen as political or overly bureaucratic.

Neither of these necessarily apply in Apple's case. Nevertheless, does Cook that it is becoming more difficult to do business in Europe for big American companies?

"I think that it's important that Europe becomes clearer of what should be done centrally by the EU and what should be done in the country," he says. "I sense more tension in that regard today than before. So I would hope that that would be sorted out for the best of Europe. Europe has great growth potential if that is sorted out."

Cook says he's "optimistic" about this.

"From a skills point of view, a developer point of view and a starting companies point of view, there are many countries here that are excellent at all three or some subset of those things. And it's a great market. So I'm optimistic."

Because it is divided into several individual markets, Apple hasn't launched all of its products and services across the EU. Ireland, for example, doesn't yet have Apple Pay, the company's Watch-friendly payment service. Cook suggested last week that it would eventually get here - though he's not saying when.

And there is still no sign of an Apple Store in Ireland either. Apple appears to roll its own retail stores out loosely according to local market size, which doesn't favour this country's expedited chances. (Belfast got one because it is part of a big market.)

But Ireland was one of the first countries to get the iPad Pro at launch. It's a machine that Cook has present as we talk in Talbot Street. He has personally taken to the device as his go-to work machine. He now travels, he says, only with an iPad Pro and an iPhone.

For anyone interested in the future of computers, this is more than a little interesting.

Serious commentators are now pointing to an 'inflection point' in the rivalry between laptops and tablets. Where tablets have been falling off in sales, newer 'pro' devices are being touted as a different breed.

An iPad Pro, for example, now runs faster and more efficiently than the majority of PCs out there. It benchmarks as fast as most MacBooks or Intel PC laptops on graphics. And its battery life is much better. Moreover, many people now know how to get around a touchscreen tablet more quickly than a mazy, menu-ridden PC.

Does Cook agree that we're at an inflection point for work computing devices? Does Apple plan to bring iPads and MacBooks closer to one another in future?

No.

"We feel strongly that customers are not really looking for a converged Mac and iPad," says Cook. "Because what that would wind up doing, or what we're worried would happen, is that neither experience would be as good as the customer wants.

"So we want to make the best tablet in the world and the best Mac in the world. And putting those two together would not achieve either. You'd begin to compromise in different ways."

So there will be no MacPad in the near future, it seems.

"It's true that the difference between the X86 [PC] and the A-series [Apple iPad architecture] is much less than it's ever been," says Cook. "That said, what we've tried to do is to recognise that people use both iOS and Mac devices. So we've taken certain features and made them more seamless across the devices.

"So with things like Handoff we just made it really simple to work on one of our products and pick it up and work on the next product."

Cook says he's "bullish" on reversing iPad sales declines of recent years. Will the iPad Pro prove to be that transitional device?

Few will bet against Apple's nous anymore. Its last set of financial results showed nearly $1bn in weekly profits. It now sells 22,000 iPhones every hour. In business terms, it is doing almost twice as well as when Cook took over the chief executive position in 2011.

Will an electric car, a surge in Watch adoption or a new wave of professional iPads bring it closer to the $1 trillion company mark?

For Cook, it doesn't appear to be about the money.

"It's about the products," he says. "It's always about the products. We have goals. Revenue and profits? They come as a result of these."

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