Revenues will be approximately 180 billion. Theres probably no other company on the face of the earth that could say that. Most companies begin to go larger and larger and larger porportfolios because you alway its so easy to add, its hard to edit. Its hard to stay focused, and yet we know well only do our best work if we stay focused. So, you know, the hardest decisions we make are all the things not to work on. Charlie tim cook for the hour, next. And by bloomberg. A provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Charlie tim cook is here, the c. E. O. Of apple. Joined apple in 1998 against advice of friends and better judgment. He said apple in early 1998 was very different than the apple of today. The company has been losing sales for years and commonly considered to be on the verge of extension. Hes also said working at apple was never any plan that id outlined for myself but was, without a doubt, the best decision id ever made. On tuesday cook announced what he called the next chapter in apples story at the same venue where steve jobs introduced the mcintosh personal computer three decades ago. He reviewed the new products and launched apple pay that aimed to do something about the credit card. I am pleased to have tim cook at the table. Thank you for inviting me. Charlie we have much to talk about. You call it the next chapter, why . The apple watch is the most personal device weve ever created. I 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 and, as the product came to fruition, it became not only the timepiece that you would expect but a device that can do many Different Things, including really a whole new way of communicating and connecting people and also it has a health and fitness component that we think has you know, it could really be profound. Kit take your it can take your Blood Pressure and other things. It will start with heart and be sort of a personal trainer for you. You can set goals and it will reward you for achieving certain things. You can choose to interact with your doctor, you can choose to combine it with other apps on the phone and get a full view of your health. So its a whole new area for apple. Were all about making great product and enriching peoples lives, and we see it as allowing us to do that at a whole different level. Then, of course, iphone 6 and iphone 6 plus, these are the best iphones weve ever done. Charlie this is my iphone. Look at the size of it. This is the iphone 6. Biggest phone weve ever done. Charlie thinnest. Thinnest weve ever done. The screen is just to die for. Its super fast. Its lightning fast. It has a whole new range of Wireless Technology and, so, its screaming fast on the wireless network. Its really unbelievable. And it feels unbelievable in your hand. Hold it. Its something. Its really unbelievable. The design, johnny and his team did such an incredible job here, its really seamless between the glass. Its like a singular form. Charlie yes. But back to whats next. This represents a continuation of the iphone . Well, a leapfrog, i would say. Yes, its the iphone 6, its not the first iphone. Charlie right. But its the biggest advancement ever in iphone history. And, so, we think that the upgrade cycle here and the number of people that will 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 . No, honestly, charlie, we could have done a larger iphone years ago. Its never been about just making a larger phone. Its been about making a better phonein every single way. So we ship things when theyre ready, and we think that both the display technology here, the battery technology, that Everything Else and the software, you can, on here, you can still use this phone onehanded because you can tap it twice, and the screen will come down. So the ingenuity here and the fact that weve integrated software, hardware services, which i think only apple can do, this phone, now is the time for it. Charlie there are other watches on the market. Sure. Charlie samsung and others. Sure. Charlie is it 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 arguably was the best and the first modern one but not the first. The iphone was not the first smartphone. Blackberry and palm was shipping phones. Iphone was the first modern iphone. Ipads were shipping decades before and apple was the first modern. The watch im wearing here will be the first watch. Charlie may i see that . You may see that. Charlie see if you can get in on this. You cant get this today. Early next year. But you can see some of the apps i have on here. I may have some things on here. Charlie so what is interesting is that outside, developers can design apps for this watch . Yes, we announced before shipping so the developers will have time to develop software for it. The first few days, ill say theres going to be a lot of stuff available for it. Charlie theres a fashion aspect to this item. Yes. Charlie nort mark newsom was brought in. Mark was a great addition to the apple team. But johnny and team recognized that, to wear something, it had to be incredibly personal. It had to reflect your taste and express what you wanted to express by yourself. Its sort of like youre closing your shoes. Youre not going to wear the same thick everybody else does. So most Tech Companies look at this as only technology. We recognize that technology itself isnt sufficient, that it had to have a style element. It had to be something that youre proud of wearing. I mean, this is connected to your body. And, so charlie it makes the computer personal. It makes it very personal. Now, that doesnt take away from the function of it. The function of it is killer. I mean, there is a computer on a chip in here. You know, its the first one weve ever done. Theres 400, 500 components wrapped in one. It has everything from the gpu to cpu to memory and all the rest. Charlie i have to have an iefn foiphone for it. Yes, it requires an iphone because they have been designed to Work Together. So things like using the cellular system to pull down your messages. However, if you go for a run and you dont want to carry your iphone, music is also in your watch. So with a bluetooth head set, you can run and listen to music without your iphone. Charlie the healthcare business is a huge sector of our economy. Yes. Charlie this is your entre into that in some way . I see this as huge, charlie. And im not looking at it just from the monetary piece of it. We do want to enrich peoples lives so we want to make great products that enrich peoples lives. Neither one is sufficient by itself. We want to do both. So arguably, with healthcare, theres a wideopen field to make some really profound contributions. So our entry into this is we announced health kit in june. Health kit allows, if you want, if you wish, on your phone, you can begin to take all of the data thats in all of your health apps and aggregate those. You might elect just to use that yourself and might elect to interact with your doctor on them. So all of a sudden weve got 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, and when you need help, it empowers you to take certain data to your doctor to get help from them, all the while guarding your privacy so that nobody is getting the data, if you dont want them to have the data, nobody is sharing the data if you dont want them to share the data, and no were not keeping it. Charlie in introducing these products, there was the bout to the past as i suggested the arena where you had it is what steve introduced 30 years ago, the pak macintosh. When you introduced the watch, you said one more thing, words steve used. Where is steve in all this . Well, hes in my heart, deep in apples dna. His spirit will always be at 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 . On the fourth floor. His name is still on the door. And we if you think about the things that 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. Theyre 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 you and i are sitting at, you can put every apple product on it, every single one we ship today, and yet this year our revenues will be approximately 180 billion. Theres probably no other company on the face of the earth that could say that. Most companies do larger and larger portfolios because you always its so easy to add. Its hard to edit. Its hard to stay focused and, yet, we know we only do our best work if we stay focused. So the hardest decisions we make are all the things not to work on, frankly. Because theres lots of things wed like to work on we have interest in, but we know we cant do everything great. Charlie is tv one of those . Well, tv is one that we continue to have great interest in. I choose my words carefully there. You know, tv is one of those things that, if were really honest, its stuck back in the 70s. Think about how much your life has changed and all the things around you that have changed, yet tv, when you go in your living room to watch the tv or wherever it might be, it almost feels like youre rewinding the clock and youve entered a time capsule and youre going backwards. The interface is terrible. Charlie yes. I mean, its awful and you watch things when they come on, unless you remember to record them. Charlie so why dont you fix that . Well, you know, i dont want to get into what were doing in the future, but weve taken steps with apple tv, and apple tv now has over 20 million users, and, so, it has far exceeded the hobby label weve placed on it and weve added more and more content to it this year and, so, theres increasingly more things you can do on there. So this is an area we continue to look at. Charlie was this a question to you 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 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 that steve joos had laid . He called me one weekend in august of 11, and he said, id like to talk. And i said, oh, okay. And i go, when . He goes, now. laughter i said, ill be right over. And he told me, he said, i have been thinking a lot. Apples never had a professional transition at c. E. O. Im determined that we will have one now. I want you to be the c. E. O. And, honestly, i didnt see it coming. Charlie you did not see it coming . I know you look at me in disbelief. Charlie yes. 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, and i guess at the end of the day, i always thought he would bounce. He always had. He had had some incredible lows in his health and had always bounced and i always believed he would. So it took me a little by surprise. I mean, he had talked to me about being c. E. O. Before, so i always knew it was his longterm thinking charlie that you would become the c. E. O. To become the c. E. O. Charlie but not then. Not that specific moment. 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 . And just sort of having a good banter with him. I said, for example, ads, do you want me just to do the ones that i think are right or do you want to be involved in it . And he said, well, i hope you will ask my opinion on some things. laughter but i thought, charlie, on that day that he would be chairman for a long time, that i would be c. E. O. For a long time and that we would continue to Work Together. He knew when he chose me that i wasnt like him, that im not a carbon copy of him. So he obviously thought through that deeply about who he wanted to lead apple. So that i have always felt the responsibility of, and ive wanted desperately to continue his legacy. And the apple i deeply love. So 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 never had that objective. Ive never had the objective of being like him because i knew the only person i can be is the person i am, right, and im not an actor. I would be terrible in hollywood. So thats what ive done. Ive tried to be the best tim cook i can be, and i think that the reality is that apple has always had incredible contributors at very high levels. Johnnys been there forever and contributed at an incredible level as has craig and jeff andd dan, and you just go around the table. We have a new c. F. O. Now. Weve recruited angela who runs retail. She is fantastic. This level of people are capable of doing incredible things and, you know, its the privilege of a lifetime to work with them. Charlie you have a picture in your office of Martin Luther king and a picture of robert f. Kennedy. Robert f. Kennedy after his brothers assassination, someone said the difficulty for him, well, hell have no r. F. K. As he was to his brother jack. So i might ask the question, do you have a tim as you were tim to steve . I think each person if youre a c. E. O. , the most important thing, to me, is to pick people around you that arent like you, that complement you because you want to build a puzzle. You dont want to stack chicklets yo up and have everyoe be the same. I believe in diversity with a capital d, and thats diversity in thought and any way you want to measure it. So the people that surrounded me are not like me. They have skills that i dont have. I may have some that they dont have. What we do i as a team collectively are able to do some incredible things, and its because we collaborate, and i see one of my key things in life to make sure we collaborate at an incredible level because we run the company functionally. Were not like the typical can big company that has n number of divisions and p ls. Everybody is a functional expert, then we collectively, to get things done, we Work Together as a team because the work really happens horizontally in our company, not vertically. Products are horizontal. It takes Hardware Plus Software plus services to make a killer product. So all of these people, if you were to line us up and talk to everyone, you know several of them, were all different. And thats the power of it is that were not trying to put everyone through a car wash 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 about something. We dont 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 did you leading the team have any question that you could accomplish what you did, knowing those questions were out there about the future of apple . I think, for me i cant talk about what everybody else thinks but for me, one great skill i have is blocking noise. So i typically read and listen to things that are deep and challenging and intellectual in nature and not be just the noise. I think if you get caught up in the noise as a c. E. O. , youre going to be a terrible c. E. O. , because theres so much noise out there in the world that everybodys on the sidelines saying what you should do, shouldnt do, et cetera. Its sort of like the old roosevelt quote in the arena. Charlie teddy roosevelt. Yeah. Charlie credit belonged in the arena to the man who gets dirty and all those things. Yes. Well, im the dirty one, and you have to block the noise. So 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 but that goes back to my original question. Yes. Charlie apple is becoming its building on its tradition, but its doing things different. Steve said to you, dont ever ask yourself what does steve do, correct . He did. Charlie dont ask that. Do what you think you need to do based on the circumstances that you face. So is apple becoming more open . I mentioned the fact that people who have great apps can do it for the watch. Youre now engaged in partnerships with people like i. B. M. Youve made an acquisition. Tell me, where is apple doing . Are we more open . Yes. Charlie more engaged by partnerships . Are we interested in enterprise because we can partner with i. B. M. . I think i. B. M. , thats a great one to talk about because i think it will give you an insight into how we look at things. This is probably different than the past is we look at these products and the ipads that arent here and we think we can change the way people work. Weve changed the consumers life. Weve changed the way students learn and teachers teach. But when you get to the working environment, the change that weve made to us isnt significant enough. So we begin to ask ourselves why . Why havent we done more . The real answer is, in the applications, theres 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 that 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 didnt want to forget it because this is a way to enrich peoples lives in a big way, to change the way people work. I mean, most of our life is spent working, and certainly our apps are changing the way i work, but im not seeing it as much in other places. So we begin looking out and thinking about, well, who could we partner with . And jenny and i have been talking about some other things for a while. I have Great Respect for her, great trust in her. Charlie the c. E. O. Of i. B. M. Yes. Shes fantastic. A