Apple's Tim Cook Voluntarily Forgoes $75 Million Payout
forbes.com
forbes.com
This suggests that, like MSFT before them, they'll eventually raise dividends.
</amateurish speculation>
Allow me to add my own. I would love to see them purchase a carrier though.
Imagine it. How much better would things get if Apple owned the towers and spectrum too.
They've got more hardware and software talent in units as small as 5 or 10 then some of those companies have in their entire workforce.
And for all the ridiculousness they've put us all through over the years I would love to seen them squirm as they try to figure out how they are going to compete with Apple.
Carriers are capital-intensive, operations-intensive, customer service-intensive businesses. You have to run them effectively, as a carrier, at huge expense, or they degrade.
Apple has no competence in running wireless carriers. Tens of billions of dollars will buy a lot of competence, but not instantaneously. Given the stakes, I imagine "operating a wireless carrier" is not one of those things you want to learn how to do as you go.
I'm also amused by the sentiment on HN (and the Internet at large) that 2012 wireless carriers are really just a cartel organized to collude on providing bad customer service and exorbitant rate structures. As if no carrier figured out that executing better service and value would improve their competitive position; no, the only reason wireless carriers suck is that they choose to suck!
To be fair, when an industry colludes to price-fix broken spectrum auctions and makes money by confusing the customers they're not going to be praised for good customer service.
> Responding to questions from New York Times correspondent John Markoff at a Churchill Club breakfast gathering Thursday morning, Colligan laughed off the idea that any company — including the wildly popular Apple Computer — could easily win customers in the finicky smart-phone sector.
> *“We’ve learned and struggled for a few years here figuring out how to make a decent phone,” he said. “PC guys are not going to just figure this out. They’re not going to just walk in.”
Turns out they really were just sitting on their laurels, and Apple really could walk in and eat their lunch.
Not disputing that running a carrier is a PITA. Just that the carrier market today really is competent and providing roughly the best value it can.
Not really, Apple had been struggling for a few years to learn how to make a decent phone too, they just didn't release the ones that kind of sucked.
AT&T (in its previous incarnations as Cingular, SBC, BellSouth, and AT&T) has spent the last twelve years trying to make a functional cell carrier, and it takes them over 70,000 employees to do so. I suspect that Apple's 60,000 employees aren't focused on carrier operations.
Tiered data and text messaging are perfect examples of this. Data costs carriers way less than a dollar per GB to provide, yet this amount costs the customer around $10. Text messaging is even worse, because it costs almost nothing for the carrier to provide it, but it costs customers $10-30 each month.
I'm unlike virtually everyone else on HN in not being alarmed by the pricing of text messages. Prices have nothing to do with costs. Text message pricing is a way of segmenting customers by behavior and price sensitivity, nothing more.
Go on.. (by that i mean can you explain your view of this. it sounds interesting and I don't understand)
It's textbook price discrimination[1]. If somebody's not willing to pay much for texting, they can pay nothing and ask that it be disabled. If somebody cares very little about it, they can pay 20¢ per message[2]. If they know they'll text lots or just want to pay a flat fee and not care, they can pay $20/month[2].
The 20¢ per message is because if you're a light texter, that's about the most you're willing to pay per message.
The cost of something only sets a bottom floor on a price; it's not immoral or unethical to maximize profit by setting a sale price with a large margin.
1: http://en.wikipedia.org/wiki/Price_discrimination
2: http://www.wireless.att.com/cell-phone-service/cell-phone-pl...
Similar to what is done by web hosting providers. Offering more disk space for more money when the average customer isn't going to come close to using the base allotment.
Also, we did this with domain redemptions. We used to charge a fee and process them all at about the same speed (Which was pretty quick usually within an hour or so.) We changed the order process so that the default turn time would be 12 to 24 hours for $0 upcharge. Then, say 8 to 12 hours for $15 more. Then $25 upcharge for 2 to 8 hours.
The response was instant and about 60% of the people paid the $25 charge. Not only that but if people are really upset we can give them the quick service for free (because it doesn't cost us anymore) and it makes them really happy. (Like an upgrade to an empty seat in 1st Class.)
I like to sail when I go to an island. I can go to the resort that offers free sailboats and wait my turn. Or I can go to the resort that charges $x to use the sailboat. I like the $x because that way I'm not competing with others wanting the same limited resource.
Actually the last place I was at charged for internet access. That was good I had plenty of bandwidth the $10 day charge kept people off the wifi.
A good way to think about it is that people who send lots of text messages are simultaneously subsidizing the accounts of people who don't send text messages.
Things like this sometimes only work in one direction in businesses which have locked in customers and depending on their competition and what they do. Now a bank that all the sudden loses income in one area will try and make it up in other areas (as was shown recently) by increasing costs. But a bank which makes extra money in an area won't (unless they have to for competitive reasons) lower the costs of their other services. They will keep that money and report more profit! Because it's not that easy to switch your banking arrangement. It's not like buying a Western digital hard drive instead of a Seagate.
So this has to do with competition as well as the ease of someone switching their provider or vendor. And exactly how much competition they have or what their competitors are doing and what they are charging. Every situation is of course different.
Apple has more capital than they know what to do with, world-class operations chops, and a huge retail operation focused on great customer service. That doesn't mean they can operate a carrier.
Another major obstacle is that it would be insanely expensive to just buy a major carrier like Verizon and then only support iPhones on it. You'd have tons of underutilized network infrastructure, and you'd have to support third-party phones. You could keep operating it as a general carrier and sell other phones, but why would Apple do that? There's also the possibility of operating an MVNO, but then you can't control the quality of the underlying network.
I'm sure the idea has been discussed at Apple and they've come to similar conclusions.
(Totally spitballing here. I have no idea whether that's feasible.)
I'm not doubting that they could do it, but dealing with radio towers, coverage, regulations, interference, etc... isn't going to be easy to do right. It's hard to make everyone happy, so it's probably better for Apple to let the carriers fight over coverage than to try to compete head-on.
For example, Apple the carrier might find that a city isn't profitable to cover, so they avoid it. However, a regional carrier might find it to be. So if Apple had their own carrier, they lose out on any customers there. But, if they allowed that regional carrier to sell the iPhone, then they can keep the customer.
I don't think it has anything to do with having a scapegoat for poor performance, or lack of ability to run a carrier. I just don't think it is in their interest to start one. Because, let's face it, this is Apple... They wouldn't be satisfied with running a #3 or #4 carrier, they would want to do it right - and be everywhere. And that is very expensive.
I could see Apple buying a carrier purely for investment reasons though, but they could do that with any business they choose.
Apple is a public company. So is Questcor Pharma. Apple is a very public company. They are overanalysed, over-reported, and over-bullshitted by the tech, financial and news press. Their share price organically trades down quite frequently as a result of this. Remember the "oh fuck it's not an iPhone 5 it's just an iPhone 4S" share price?
A big part of Apple's leadership focus at every level is managing expectations. Tim Cook has a major role to play in managing the expectations of people internally, of course, but also externally. And here he's done that by avoiding any hint of impropriety. No Gizmodo headlines. No peroxide CNBC gristleheads asking so-called experts "So, David, Tim Cook institutes dividends and then receives $75m himself? Are the shareholders gonna put up with that?!"
This is an excellent, excellent piece of management. And I bet it's worth nearly $75m in avoided short term down trading to Cook's stock package.
Apple comes into a lot of criticism for the constraints that it puts on its employees. If I were an Apple employee, Cook’s action here (omitting financial gain form himself) would be a valuable demo to me of commitment to employees' welfare.
I hate how the author automatically assumes the worst about Cook and that it has to do with taxes (even if it did, I'm pretty sure 75 million - (whatever taxes incurred) is still quite a few million).
I think it makes sense and is a solid move that he recognizes that he's issuing the dividends and that taking them could appear as a conflict of interest. If I was an Apple employee, I would be impressed.
If you almost lot it all, only to come back, you might want to kee a large war chest too.
Tim Cook serves on Apple's board of directors according to this page: http://www.apple.com/pr/bios/tim-cook.html
UPDATE: ups, indeed, I can't read, moot point then