The Exchange

5 Things Tim Cook Should Say (but Probably Won’t)

Aaron Pressman
The Exchange

Accompanying the release of the latest iPhone models earlier this month, typically media-shy Apple (AAPL) executives went on a bit of a public-relations bender. Chief Executive Tim Cook, for one, sat for a lengthy interview with Bloomberg Businessweek reporter Sam Grobart.

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Apple CEO Tim Cook

During the interview, Cook called much of the Android market “junk,” said some competing tablets are bought for kids “just to shut them up” and added that he wouldn’t “slit my wrists” if Apple’s stock price fell. To be fair, he also articulated several smart points about Apple’s strategy. But there were a couple more things it would have been nice for him to address. Cook has gotten a lot right recently, with sales of the new iPhones hitting a record 9 million in three days and iTunes Radio already grabbing market share. Still, there's always room for improvement. Here's what Cook should consider saying say next time (even though he likely won't):

“I'm pleased to tell you today that I've signed legislation that will outlaw iTunes forever."

Apple’s iTune software, first released in 2001, is installed on hundreds of millions of Macintosh and Windows computers. And for a company that makes its money from beautifully designed and intelligently functioning products, iTunes is a rare clunker.

To start, it combines far too many functions. iTunes not only catalogs and plays music, movies, TV shows and podcasts, it also serves as a syncing connection to iPods, iPads and iPhones. It can be the only way to transfer some documents from iPads back and forth with a computer. It also contains the entire catalog of Apple digital store offerings, from songs and movies to apps and ebooks. And now it’s also the face of iTunes Radio.

A supposed major overhaul last year brought only a slight reorganization of the chaos. But revealingly, on iOS, these myriad functions are split up into different apps. Apple needs to go back to the drawing board and figure our how to simplify and separate.

“Due to a scheduling conflict, I can no longer participate in quarterly earnings calls.”

Wall Street’s stock analysts focus on company performance from quarter to quarter as measured by a whole bunch of financial statistics. Great companies are managed for the long term, with a focus on products and customers. Managing for great quarterly results is a trap that results in short-term thinking, foolish cost-cutting and dinner with billionaire financiers.

So why is Tim Cook spending valuable time answering questions every quarter from the Wall Street hoards and listening to their short-term concerns, not to mention the hours he must spend prepping for the call? Steve Jobs, after all, made it a point to not appear regularly on the call, dropping in only once every few years.

Move on, Tim, and leave this task to someone lower down on the food chain.

“I am feeling sort of stretched, butter scraped over too much bread. So I am hiring Susan Wojcicki from Google as chief operating officer.”

Before he was the CEO, Cook was the chief operating officer. He focused largely on manufacturing, retail operations and improving Apple’s supply chain. Jobs oversaw product design, negotiations with key partners and overall strategy.

The grand design of Cook as CEO seems to be that he continue to focus on his prior responsibilities while delegating much of the design and negotiation work to others, such as VP of Design Jony Ive and VP of Internet Software and Services Eddy Cue. But, for whatever reason, this setup isn’t working.

Last year Apple ran out of products to sell in three of its four main lines – iPhones, iPads and iMacs. This year Apple is already missing out on sales of the top-of-the-line iPhone 5S due to manufacturing shortages. And some lagging core products such as iCloud and the Maps app aren’t improving as quickly as needed.

Time to bring in some help. There is likely a wide range of executives outside Apple who could take some of the pressure off Cook. How about Google’s (GOOG) senior VP Susan Wojcicki, who oversees advertising and might have a reason to want to leave? She would bring fresh outside thinking, plus cloud expertise and intimate knowledge of a key competitor.

“Our cloud services stink. We are partnering with Microsoft Azure.”

As noted, Apple is not doing very well playing catch-up with cloud giant Google in the area of online services. The company has poured billions of dollars into building its own data centers but its service still lacks the reliability and functionality of competitors such as Google, Amazon (AMZN) and Microsoft (MSFT).

Partnering with Google, or even Amazon, is out of the question for strategic reasons. But why not Microsoft? The Redmond giant is struggling to find its way in the post-PC era. With CEO Steve Ballmer on the way out, Apple could craft a new deal with a new Microsoft CEO. Let Microsoft focus on its strengths and let Apple go back to what it does best.

“Ebook prices are too high and it’s our fault.”

Before Apple entered the ebook market, Amazon sold many best sellers and new releases for $9.99. But in 2010 Apple conspired with major book publishers to raise prices. Even after the publishers settled with regulators and a court found Apple guilty of organizing the price-fixing, ebook prices remain well above the prior levels. And the growth of ebook sales has slowed dramatically, although likely for multiple reasons.

Apple hasn’t always been on the side of big business against consumers. It held the line on digital music prices for years and still requires that almost all albums be sold by the track as well. To undo the price-fixing damage, Apple should start cutting ebook prices and negotiating with publishers to lift limits on discounting. It's the least they could do.

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