Apple COO Tim Cook Talks Tablet Competition, Major Supply Deal

| iObserver

During Apple’s earnings conference call on Tuesday, company COO Tim Cook was asked about the iPad’s competition and offered some frank views on the subject, saying: “If you look at what is shipping today there is not much out there.” Later, another analyst queried him on a US$3.9 billion component supply contract that was revealed during the initial presentation, and he hinted that it could be tied to Apple’s Next Big Thing.

On the subject of tablets, Mr. Cook said: “Generally speaking, there are two kind of groups today. The ones that are using a Windows-based operating system are generally fairly big and heavy and expensive. They have a very weak battery life. They require keyboard or stylus as an input device. And from our point of view and what we have seen customers, frankly, just are just not interested in them.”

And the second group? “Then you have the Android tablets,” the COO continued. “And the variety that are out shipping today, the operating system wasn’t really designed for tablet. Google has said this, and so this is not just an Apple view by any means. So you wind up having a size of a tablet that is less than what we believe is reasonable, or even one that would provide what we feel is a real tablet experience. So basically you wind up with kind of a scaled-up smartphone, which is a bizarre product in our view.”

He also offered his thoughts on the Android tablets unveiled during CES: “Generally they lack performance specs, they lack prices, they lack timing. And so today they are vapor. We will assess them as they come out; however, we are not sitting still, and we have a huge first mover advantage. We have an incredible user experience from iTunes to the App Store and an enormous number of apps and a huge ecosystem. So we are very, very confident with entering into a fight with anyone.”

Like the iPhone, iPod touch, and new MacBook Air, the iPad uses Flash storage, and Mr. Cook looked back on the $1 billion flash supply deal secured at the end of 2005, which was obviously used to lock in a critical component for products that are now a large part of Apple’s business. He recalled the company did so “because we anticipated that Flash would become increasingly important across our entire product line, and increasingly important to the industry, and so we wanted a secure supply for the company.”

Speaking of that recent $3.9 billion component supply contract, Mr. Cook explained: “In the past several quarters we have identified another area and come to some recent agreements that [CFO] Peter [Oppenheimer] talked about in his opening comments. And these payments consist of both prepayments and capital for process equipment and tooling. And similar to the Flash agreements, they are focused in an area that we feel is very strategic.

“And in fact, I prefer not to go into more detail about what specific area it is in. But it is the same kind of thinking that led us to the Flash deals.”

Let the speculation begin.

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Comments

Tiger

Quantum hard drives. The next small thing!

jfbiii

Didn’t those iPad users have their info stolen from an AT&T server and not from their devices?

My guess for the technology is batteries/fuel cells. Even more important than screens (my second guess).

Phredd

@apple_s#@$ Millions and millions of “tards” obviously disagree with you!

jfbiii

Third guess for acquisition/investment is a space elevator.

kevinlane

Plus I?ve seen more jail broken iPads, iPods, and iPhones than any other physical product out there.

Perhaps that’s because there are WAY more iPads, iPods, and iPhones (jail broken or otherwise) than any other physical product out there. Millions and millions more, I think.

FlipFriddle

especially since 90% of the other tablets are just vaporware.

Janet Tokerud

For Apple’s next big supply requirement, the one that comes to mind immediately, given current hi-rez iPad rumours, is hi-rez touch screens. We know there are manufacturing challenges there and that bigger screens have lower yields. The Retina displays for iPad would be enough but this isn’t going away as we move away from paper across the board. You’ve got the sudden popularity of touch-screen *tablets* (read so far iPad and the upcoming Android tablets) plus the massive transition from feature phones to smartphones still in its growth phase.

Lee Dronick

Didn?t those iPad users have their info stolen from an AT&T server and not from their devices?

Yes, it was an AT&T security breach.

John Molloy

@apple_sucks

bitter much?

Lee Dronick

@apple_sucks

bitter much?

Don’t respond to him, flag his post as inappropriate.

mrmwebmax

+

One rumor I’ve seen lately (via Google News) is that Apple will market an Apple-branded TV in 2012, meaning the whole TV, and not just a set-top box. Maybe that’s behind the component supply contract?

Lee Dronick

Apple will market an Apple-branded TV in 2012, meaning the whole TV, and not just a set-top box.

Hmmmm, I do not even yet have a digital TV much less an Apple TV.

furbies

Maybe that?s behind the component supply contract?

Nope, don’t see Apple doing the whole TV. Sorry.

Maybe it’s for the Retina iPad displays, or even something that no one’s ever imagined before ?

Daniel Neal

Battery technology or truly high density screens for the iPad are the logical places for Apple to put it’s money. They leverage Apple’s present marketing strengths and allow them to put performance distance between them and the Android competition.

They can also be applied to new products that the public/competition have not yet thought off, but which the Apple designers have probably had on the drawing board for the past few years.

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