Tim Cook Talks Tablets

By Lori Castle, Editor in Chief — July 23, 2014

Apple announced financial results for its fiscal 2014 third quarter ended June 28, 2014. The Company posted quarterly revenue of $37.4 billion and quarterly net profit of $7.7 billion. These results compare to revenue of $35.3 billion and net profit of $6.9 billion in the year-ago quarter.
 
Gross margin was 39.4% compared to 36.9% in the year-ago quarter. International sales accounted for 59% of the quarter's revenue.
 
"Our record June quarter revenue was fueled by strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem, driving our highest EPS growth rate in seven quarters," said Tim Cook, Apple's CEO. "From the pocket to the car, to the workplace, home and gym, we have a very large vision of what iOS can be and we're incredibly excited about our plans."
 
Tablet Outlook
Over 35 million iPhones were sold, and while iPad sales met the company's expectations, Cook noted that they did not meet that of the Street. He cited an overall decline in the tablet market, but what of the longer term outlook?
 
"We still feel that category as a whole is in its early days and that there is also significant innovation that can be brought to the iPad and we plan on doing that," said Cook. "When I look at the top level numbers, I get really excited when I see that more than 50% of the iPads that we're selling are going to someone who is a first time tablet buyer."
 
iPads are in virtually all Fortune 500 companies, 99% of them "to be exact" according to Cook, and 93% of the Global 500. Still, looking at the overall business market in depth, market share in the U.S., in the commercial sector is at 76% (according to IDC), but the penetration in business is low at 20%.
 
Better Apps
For context, Cook compared to Apple's penetration of notebooks in business at 60%. "And so we think that there is a substantial upside in business. And this was one of the thinkings behind the partnership with IBM that we announced last week," he said.
 
It will "unleash" a better go to market, which Cook said IBM brings to the table, but even more importantly apps that are written with mobile first in mind. "Not all, but many of the enterprises apps that have been written for iPad have been essentially ports from a desktop arrangement and haven’t taken full advantage of mobile," he pointed out.
 
A new generation of mobile enterprise applications, will now be designed with iPad's functionality in mind backed by IBM's cloud services and data analytics. Cook believes this is such a catalyst for future iPad growth.
 
He also called the IBM partnership, "a radical step for Enterprise" which will be great for productivity and creativity of enterprise customers.
 
There was no specific mention of iPhone6, which many expect in the fall along with possible wearable(s). The Wall Street Journal reported a large order of smartphone units thought to be the next big thing.

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