Next chapter in apples story at the same venue where it steve jobs introduced personal computer 30 years ago. He unveiled the iphone 6, the iphone 6 plus and the apple watch. He launched apple pay, a mobile payment system. Have tim cook at this table for the first time. Welcome. Tim great to be here. Thank you for inviting me. Charlie you call it the next chapter. Why . The apple watch is the most personal device we have ever created. Think it takes us into a whole different area. We had an intense team working on this for three years. And so we explored many different things. As the product came to fruition, it became not only the timepiece you would expect but a device that can do many different , including a whole new way of communicating and connecting people. And it also has a health and fitness component that we think has, could really be for found. Charlie take your blood pressure. Tim it will start with heart. And it will be a sort of a personal trainer for you. You can set goals and it will reward you. You can choose to interact with your doctor. You can choose to combine it with other apps and get a full view of your health. And so, it is a holding area for apple. And we think, were all about making great products, enriching peoples lives. We see it as allowing us to do that at a whole different level. 6 arecourse, iphone the best iphones we have ever done. You have them in front of you. Charlie this is my iphone. This is the iphone 6. Tim the thinnest we have ever done. The screen is just to die for. Its superfast. It is lightning fast. New range ofe wireless technology. So it is screaming fast on the wireless networks. It is unbelievable, and it feels unbelievable in your hand. Hold it. It is really unbelievable. Johnny and his team debts is incredible job here. It is really seamless between the glass. It is like a singular form. Back to what is next. This represents a continuation of the iphone. A leapfrog, i would say, but yes, it is the iphone 6. It is not the first iphone. Advancemente used ever an iphone history. The upgrade cycle here and the number of people that was switch from other smartphones it will be enormous. Charlie were you challenged by what samsung does and what it has in the development of this size personal smartphone . Charlie, wey, couldve done a larger iphone years ago. It has never been about just making a larger phone. It is about been about making a larger phone in every single way. So we ship things when they are ready. We think the display technology here and the battery technology, and Everything Else in the on here,u can you can use this phone onehanded because you can tap it twice. And the string will come down. Here ande ingenuity the fact that we have integrated software and Hardware Services which i think only apple can do. This phone now is the time for it. There are other watches on the market, samsung and others. Is the philosophy of apple, we dont have to be first, we want to be prepared to be the best . The philosophy has always been to be the best, not the first. If you look back in time at apple, the ipod the ipod was not the first mp3 player. It was arguably the best, and arguably it was the first modern one, but not the first. Blackberry was shipping phones. Plam was shipping palm was it was the first modern smartphone. Tablets were shipping a decade before, yet ipad arguably was the first modern tablet, and the first one that met any level of commercial success. The watch, which i am wearing here, will be the first watch charlie may i see that . Tim you may see that. Charlie see if you can get in on this. You cannot get this today. Tim early next year. You can see some of the apps i have on here. Charlie what is interesting is that outside entrepreneurs can design apps for this watch. Tim yes, we have opened it to developers. One reason we wanted to announce it before shipping it so that developers will have time to develop software for it. We think that, based on the first few days, i would say there is going to be a lot of stuff. Charlie there is a fashion item aspect to this. Tim there is. Charlie johnny brought in his friend, mark newsom. Tim another great addition to the apple team. Johnny and team recognized that to wear something, it had to be incredibly personal. It had to reflect your taste and express what you want to express about yourself. It is sort of like your clothes and your shoes. You are not going to wear the same thing everybody else does. Most tech companies, i think, look at this as only technology. We recognize that technology itself is not sufficient. It had to have a style element. It had to be something that you are proud of wearing. I mean, this is connected to your body. Charlie it makes the computer personal. Tim it makes it very personal. And that does not take away from the function of it. The function is killer. There is a computer on a chip in here. It is the first we have ever done. There is 400 or 500 components, a cpu and the rest. Charlie but you have to have an iphone. Tim they are designed to Work Together. Things like messages, using the cellular system to pull down your messages. If you go for a run and do not want to carry your iphone, music is also in your watch. With a bluetooth headset, you can listen to your music without your iphone. Charlie the healthcare business is a huge sector of our economy. This is your entry into that, in some way . Tim i see this as huge. I am not looking at it just from the monetary piece of it. We do want to enrich peoples lives. We want to make great products that enrich peoples lives. Neither one is sufficient by itself. We want to do both. Arguably, with health care, there is a wide open field to make some really profound contributions. And so our entry into this is, we announced healthkit in june. It allows, if you wish, on your phone you can begin to take all the data in all of your health apps and aggregate those. You might elect just use that yourself. You might elect to interact with your doctor on them. We also have a device that gathers certain fitness data about you. So this is yet another way to begin to build a comprehensive view of your life, which should empower you to take care of yourself over time. When you need help, it empowers you to take certain data to your doctor to get help from them, all while guarding your privacy. No one is getting the data if you do not want to share the data, and we are not keeping it. Charlie in introducing these products the arena where steve introduced, 30 years ago, macintosh. When you introduced the watch, you famously said, one more thing, words that steve had used. Where is steve and all of this . Tim he is in my heart. He is deep in apples dna. His spirit will always be the foundation of the company. I literally think about him every day. His office is still left as it was charlie on the fourth floor. Tim his name is still on the door. And we still if you think about the things steve stood for at a macro level, he stood for innovation. He stood for the simple, not the complex. He knew that apple should only enter areas where we could control the primary technology. All of these things are still deep in our company. They are still things that we very much believe. The strive for perfection, for being the best, for only doing the best products, for staying focused the fact that, despite this table being so small that you and i are sitting at, you could put every apple product on it, every single one that we shipped today, and yet this year our revenues will be approximately 180 billion. There is probably no other company on earth that could say that. Most companies do larger and larger portfolios, because you are always it is so easy to add. It is hard to edit. It is hard to stay focused. And yet we know we will only do our best work if we stay focused. And so the hardest decisions we make are all the things not to work on, frankly. Because there is lots of things we would like to work on, that we have interesting, but we know we cannot do everything great. Charlie is tv one of them . Tim tv is one we continue to have great interest in, so i choose my words carefully there. You know, tv is one of those things that, if we are really honest, it is stuck back in the 1970s. Think about how much your life has changed, and all the things around you that has changed, and yet tv, when you go in your living room to watch the tv, or wherever it might be, it almost feels like you are rewinding the clock and have entered a time capsule, and you are going backwards. The interface is terrible. I mean, it is awful. You watch things when they come on unless you remember to record them. Charlie why dont you fix that . Tim i dont want to get into what we are doing in the future. We have taken stabs with apple tv, and apple tv now has over 20 million users. It has far exceeded the hobby label that we placed on it. And we have added more and more content to it this year. So there is increasingly more things you can do on there. This is an area we continue to look at. Charlie was this a question among some investors, consumers, people who write about technology there was the question. Steve was a visionary. Can tim continue the apple tradition of creating . Of creating new products every four years or less . Can he reach into the future . Does he have that kind of makeup . Did that concern you . Did you think about that . Were you committed to prove that apple had a future beyond the groundwork steve jobs had laid . Tim he called me one weekend in august 2011, and he said, i would like to talk. And i said, ok. And i go, when . And he goes, now. I will be right over. He says, apple has never had a transition of ceo. I am determined that we will have one now. I want you to be the ceo. I did not see it coming. I know you looked at me with disbelief, but you can say i was in denial or whatever, but i thought i felt steve was getting better. He was still at home, but i felt he was getting better. I was seeing him regularly. I guess at the end of the day i always thought he would rebound. He always had. He had incredible lows in his health and had always bounced, and i always believed he would. And so it took me a little by surprise. He had talked to me about being ceo before, so i always knew it was his longterm thinking charlie that you would become ceo. Tim but not that specific moment. So he and i had a discussion back and forth about because i was testing him on this. I said, you know, what kind of things do you want to do as chairman, versus me do . It was just sort of having a good banter with him. I go, for example, ads, do you want me to just do the ones i think are right, or do you want to be involved in it . He said, i hope you will ask my opinion on some things. [laughter] i thought, charlie, on that day, that he would be chairman for a long time. That i would be ceo for a long time. And that we would continue to Work Together. And he knew, when he chose me, that i was not like him. That i am not a carbon copy of him. And so he obviously thought through that deeply, about who he wanted to lead apple. And so that, i have always felt the responsibility of. And i wanted desperately to continue his legacy. And the apple i deeply love. From the onset, i wanted to pour every ounce that i had in myself into the company. But in terms of being everything he was, i have never had that objective. I have never had the objective of being like him. Because i knew the only person i can be is the person i am, right . I am not an actor. I would be terrible in hollywood. That is what i have done. I have tried to be the best tim cook i can be. I think that the reality is that apple has always had incredible contributors at very high levels. Johnnie has been there forever, and contributing at an incredible level, as has craig, jeff, dan. You go around the table. We have a new cfo now. This group of people and we have recruited angela. Angela now runs retail. She is fantastic. This level of people are capable of doing incredible things. And it is a privilege of a lifetime to work with them. Charlie you have a picture in your office of Martin Luther king. A picture of robert f kennedy. Robert f kennedy, after his brothers assassination, someone said the difficulty for him, he will have no rfk, as he was to his brother jack. Do you have a tim, as you were tim to steve . Tim i think each person if you are a ceo, the most important thing to me is to pick people around you that are not like you, that complement you, because you want to build a puzzle. You dont want to stack chiclets up and have everyone be the same. I believe in diversity with a capital d, diversity in thought and however you want to measure it. The people that surround me are not like me. They have skills i do not have. I might have some they do not have. What we do as a team collectively we are able to do some incredible things. And it is because we collaborate. I see one of my key things in life is to make sure we collaborate at an incredible level, because we run the company functionally. We are not like the typical big company that has nnumber of divisions. Everybody is a functional expert. We collectively, to get things done, Work Together as a team. The work happens horizontally in our company, not vertically. Products are horizontal. It takes Hardware Plus Software plus services to make a killer product. All of these people, if you were to line us up and talk to everyone you know several of them we are all different. And that is the power of it, is that we are not trying to put everyone through a carwash so they look alike, talk alike, think alike at the end of the day. We argue and debate. If you were to come in our executive Team Meetings on mondays, you would hear a lot of discussion and debate. We do not always agree on everything. But we have Great Respect for one another and we trust one another, and we complement one another. And that makes it all work. Charlie the team, you leading the team, did the team have any questions you could accomplish what you did, knowing those questions were out there about the future of apple . Tim for me i cannot talk about what everybody else thinks. For me, one great skill i have is blocking noise. I typically read and listen to things that are deep and challenging and intellectual in nature, not just the noise. I think you could get caught up in the noise as a ceo. You are going to be a terrible ceo. There is so much noise in the world. Everybody is on the sidelines, saying what you should do, should not do. It is sort of like the old roosevelt quote in the arena. Charlie credit belongs to the man in the arena who gets dirty. Tim i am the dirty one. You have to block the noise. The question, i think, is, did i have doubts . The answer is no. And did the executive team have doubts . I think you can see in our products that we were all betting on each other in a big way. Charlie tell me, where is apple going . Tim are we more open . Yes. Charlie are we engaged by partnerships . Are we interested in enterprise, because we can partner with ibm . Ask ibm is a great one to talk about. I think it will give you an insight to how we look at things. This is probably different than the past. We look at these products, and the ipads that are not here, and we think that we can change the way people work. We have changed the consumers life. We have changed the way students learn and teachers teach. When you get to the working environment, the change that we made, to us, is not significant enough. We began to ask ourselves why. Why havent we done more . The real answer is, in the applications, there is not enough apps that have been written for verticals for very deep verticals, like what the Airline Pilot does, what the bank teller does, down at the level of the job. So, we began to ask ourselves, should we do this, or should we partner, or should we just forget it . And i did not want to forget it, because this is a way to enrich peoples lives in a big way, to change the way people work. Most of our life is spent working. Certainly, our apps are changing the way i work. But i am not seeing as much in other places. So we began looking out and thinking about who we could partner with. Jenny and i had been talking about other things for a while. I had Great Respect for her, great trust in her. Charlie the ceo of ibm. Tim she is fantastic. We began to talk about this area. This is an area where they have things that we dont have. They have deep vertical knowledge of many different verticals, right . They have a huge sales force. And so ibm brings significant Enterprise Knowledge to the table. We bring the products that enterprise wants. So we have something they dont have. We also dont compete on anything. To me, this is the perfect marriage. There is no there is no friction. There is just, we have what they need, they have what we need. Together, we can provide something to customers. Ibm is in the process, with our help, of designing many different apps for many different verticals, from banking to all the different financial services, to pharmaceutical, to aerospace, manufacturing, and so forth. And they have the market we dont have. This is an area where i think everybody is going to win. We are going to win. Ibm is going to win. More importantly, the customer is going to win. Charlie why did you think you had to buy a headphone manufacturer . Tim in beats we saw several things. Charlie talent. Tim talent that i am super impressed with. Jimmy and dre are off the charts creative geniuses. They also had teams underneath i really liked. Jimmy has deep knowledge of the musical industry. Dre knows artists. Dre is an artist. They had started a Subscription Service. This Subscription Service some people think they are all alike. I went in skeptically. Not into the acquisition of their service, but jimmy had told me how great it was. One night, i am playing with theirs versus others, and it dawns on me that when i listen to theirs for a while, i feel completely different. And the reason is that they recognized that human cure ratio curation was important in the Subscription Service, that the sequencing of songs that you listen to affect how you feel. It is hard to describe, but you know it when you feel it. And so that night, i could not sleep that night. I was thinking, we need to do this. They also have i think they have done a fabulous job with their brand. And in the headphone business, it is a fastgrowing business. They went into it not long ago, and have done really well. However, they needed a global footprint. We have a global footprint. They have been primarily u. S. Not solely u. S. , but primarily u. S. I felt we could get a Subscription Service. We could get incredible talent. I think we can all put our Heads Together and do things beyond what either of us are currently doing. And we can get a fastg