Apple CEO Tim Cook: iPad mini "not a compromised product like 7-inch tablets"

Apple CEO Tim Cook: iPad mini “not a compromised product like 7-inch tablets”

Cook also talked Surface tablets and China during Apple’s Q4 conference call.

Jacqui Cheng – Oct 25, 2012 5:52 pm | 251

“iPad mini is a fantastic product; it’s not a compromised product like the 7-inch tablets.”

That’s how Apple CEO Tim Cook sees the iPad mini, according to his comments during Apple’s fourth quarter earnings call on Thursday. Cook went into detail about how Apple sees the iPad mini compared to its 7-inch competition, in addition to discussing the company’s continued growth in China and why Apple may have impressed itself with its iPad sales numbers during the quarter, even if it didn’t impress Wall Street.

But first, the numbers. Apple reported quarterly revenue of $36 billion and net profit of $8.2 billion during its fourth fiscal quarter of 2012—up from $28.3 billion and $6.6 billion for the same quarter in 2011. Apple shipped 26.9 million iPhones (58 percent unit growth from a year ago), 14 million iPads (up 26 percent from a year ago), 4.9 million Macs (up 1 percent from a year ago) and 5.3 million iPods (down 19 percent). The cash dividends for the quarter came in at $2.65 per share and will be payable on November 15 to shareholders.

Although Apple generally beat investors’ expectations for revenue and iPhones, some of the numbers—particularly those for iPad—did not impress Wall Street despite the 26 percent year-over-year growth. But Cook and Apple CFO Peter Oppenheimer insisted the 14 million number was still above Apple’s own expectations for the iPad during the quarter, explaining that there’s a typical seasonal reduction during this time of year, in addition to rumors about new devices.

“K-12 buys in the June quarter, but not the September quarter, so there’s some seasonal change,” Cook said on the call. This ” is exaggerated further when we announce a new product in March and have an enormous full quarter in the June quarter. […] In addition to all of that, it’s clear customers delay purchases of tablets due to new product rumors, and these intensified in August and September. Some of that was anticipated, and some of that I wish didn’t occur, but it did occur.”

The company’s executives continued to pat their own backs when it came to success in China, too. China represented roughly 15 percent of Apple’s revenues for fiscal 2012, with a revenue number of $23.8 billion from China for the year. “[This] is really phenomenal when you think about it,” Cook said. “That’s up over $10 billion year on year.”

Cook was also asked about his impressions of the just-launched Microsoft Surface tablet, which he described as a “fairly compromised, confusing product.” He once again painted the competition’s offerings as trying to do too many things at once: “I suppose you could design a car that flies and floats, but I don’t think it would do all of those things very well,” he said. “I think people, when they look at the iPad versus competitive offerings, are going to conclude that they really want an iPad.”

Finally, Cook made what seemed like nitpicky comments differentiating the 7.9-inch iPad mini from other 7-inch tablets—his comments showed, however, that Apple’s thought process comes down to usable area of the screen, not just a diagonal measurement. For context, Apple cofounder Steve Jobs took an opportunity to trash 7-inch tablets in 2010 calling them “dead in the water.” This led many to believe that Apple would never launch a smaller version of the iPad, but Cook made it clear that the Apple of 2012 is not launching the same product that Jobs was talking about in 2010.

“Let me be clear: we would not make one of the 7-inch tablets,” Cook said in response to a question about why the company seemingly changed its mind. “We don’t think they’re good products, and we would never make one. […] One reason is size—the difference in just the real-estate size in 7.9-inches versus 7-inches is 35 percent. When you look at the usable area, it’s much greater than that: it’s from 50 to 67 percent.”

Cook went on to point out that the iPad mini has the same number of pixels as the iPad 2—still currently being sold as a lower-cost option to the fourth-generation iPad with retina display—and can run the same App Store offerings. “It’s in a whole different league” than the competition, said Cook.