When Sanguine Tim Cook Faced Few Tough Questions With Smile-Encrusted Anxiousness

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It’s certain that the dismal performance of Apple Inc. (NASDAQ:AAPL) in Q2 fiscal 2016 is the reason for its grim stock market gig recently. The stocks that everyone cherished saw a consecutive 8-day loss after a span of 18 years i.e 1998. The panic moment was the closing share amount on Monday that valued at $93.64 which when compared shows the same value of the shares four years ago.

The ever optimistic Apple’s CEO Tim Cook appeared rather relaxed when he appeared in a recent interview conducted by Jim Cramer. Interestingly, he remarked the troubled times of Apple as a temporary turbulence.

“Look we just had actually an incredible quarter by absolute standards, $50 billion plus in revenues and $10 billion in profits. To put that in perspective, the $10 billion is more than any other company makes, so it was a pretty good quarter but not up to the Street’s (Wall Street) expectation,” said Tim Cook.

Throughout the interview, Cook seemed to repeat the same saga that he gave on Apple’s Q2 2016 fiscal earnings conference on April 26th. The quarter is marked for Apple’s depreciating revenues (12.8% collapse compared to Q2 fiscal 2015), shrinking iPhone and iPad sales and decline in profits. The highlighting point is the declining sales of Apple iPhone, which garnered around two-thirds of the company’s profit over the years.

The noticeable aspect for Apple is that 67% of Apple’s revenue is catered by foreign soil while its home market is saturated. The need of the hour for Apple is the constant search for new geographic opportunities.


The sanguine Tim Cook backed Apple’s future with the prospects of great markets, great innovations, huge opportunities geographically and the love for Apple products. One can also expect cutting-edge iPhones in the future as remarked by Cook in the interview. He emphasized the fact that in recent times there had been a number of switchers – the ones who switched to iPhone from Android phones.

The debacle of iPhone

iPhone, The frontrunner in the Apple’s revenue over the years, has recently hit the speed breaker.  The company’s aim to penetrate into the budget phone market with its iPhone SE has received mixed response globally. Cook’s foremost target for iPhone SE was India but this move appears to be in doldrums as the consumers from the price sensitive market gave a cold shoulder to iPhone SE. The launch price of a 4-inch iPhone SE has backfired as the other brands like Samsung are flooded the market with a number of devices offering a better value proposition.

“We’ve got great innovation in the pipeline for new iPhones that will incent you and other people that have iPhone today to upgrade to new iPhones. We are going to give you things that you can’t live without that you just don’t know you need today.” says Tim Cook.

The underestimated moneymakers

Apple Services, however, reduced the negative impact of the barren second fiscal quarter of 2016. The services unit recorded an exemplary 20% Y-o-Y growth to $6 billion in revenues making it the 2nd largest revenue arm of Apple.

The other moneymaker is the new kid on the block for Apple, The Apple watch. Though Apple Watch failed to excite many analysts earlier, the recent sales figures have zipped their mouths. Apple sold an estimated 12 to 13 million units sold during its first year of launch and this has helped the company to capture a sizable chunk of Smartwatch market with an impressive 52.4% share in Q1 2016.

“And so I think that in a few years we will look back and people will say, ‘How could I have ever thought about not wearing this watch? (Apple watch)’, because it’s doing so much for you. And then it’ll all of a sudden be an overnight success.”

Tim Cook looks quite optimistic with the performance of Apple Watch. He said that being in the learning phase, the roll out of Apple Watch was kept under tight control. Apple watches are available only in 14,000 locations; the number is quite low compared to the iPhones which are available in more than 200,000 stores.

New Geographic opportunities

Apple saw an unprecedented 56% Y-o-Y surge in iPhone sales in India making in its fiscal Q1 2016, making India the land of opportunity for iPhone. In his intervie, Cook again stressed upon the huge market potential that India possess in the coming years. He also emphasized the fact that 50% of the people in India are in their mid-20s or younger on today’s date and India will become the most populous country by 2022.

All above appears like some glittering stats for Apple but considering the current market share of iPhone that is hovering around 2%, the company will have to reform its sales strategy in India.

The failure of iPhone SE in India and Apple’s decision to hike the prices of their premier iPhones following the release of iPhone SE was catastrophic. One can decipher that if Apple wants to gain a sizable grounds in India, it has to revisit its pricing strategy. India is still a large market for the older version of iPhones and it may be considered as the major attribute in the sales boost in India.

Reviving China

The statements made by Cook in the interview seemed anxious as Apple doesn’t want to lose its golden paradise. Cook was enthralled with the adoption rate of iPhone SE in China. Analysts believe that the things will become rosy in China with the launch of the new version of the iPhone later this year.

“I could not be more optimistic about China” – Cook

Cook mentioned the rise of middle-class people in China as a positive sign for Apple. Five years ago, there were 50 million middle-class people in China which are slated to rise to a whopping 500 million in the next 5 years.

The other fact that Cook enlightened was the growing number of people switching from Android to iPhone. In 2015, the fantabulous 40% of iPhone sales came from smartphones users who jumped off Android ship.

Despite all such developments, Apple is still anxious about the China market. One can interpret the growing distress in Apple regarding China after the drop in iPhone sales and Apple’s online services being blocked by the Chinese authorities. Besides, the increasing number of smartphone OEMs in China likes of Xiaomi, that are offering world class products at a reasonable price has added salt to the wounds of Apple in recent years.

While we all can have our own perspectives and can have a day-long debate on the future of Apple and iPhone, only time will tell how Tim Cook has planned to reshape the Apple. With about 2 decades of working experience with Apple’s visionary Steve Jobs and the cash reserve of more than $225 billion, Tim Cook can flex its muscles in any direction.


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