Yesterday's Apple results were fairly unsurprising, as the company beat Wall Street's Q4 estimates with a $7.5B profit on strong iPhones sales, flat iPad performance, and a steadily declining number of Macs. But on the call with analysts afterwards, Tim Cook continued what has become his most surprising new tradition as Apple's CEO: he explicitly discussed Apple's interest in new product categories.
"We see significant opportunities," he said, "in both current product categories and new ones."
That's the second time Cook has mentioned new product categories on an earnings call — in April, he teased a "lot more surprises in the works," including "the potential of exciting new product categories." And looking back over Cook's two years leading Apple, there have been very specific discussion of new products the entire time, although Cook has yet to deliver any. Herewith, a short history:
October 2011: Just over two years ago, the first excerpts of Walter Isaacson's Steve Jobs biography reveal that Jobs wanted to build a revolutionary new TV. "It will have the simplest user interface you could imagine," says Jobs in the book, published in October 2011. "I finally cracked it." Whispers of an Apple TV immediately begin building.
February 2012: Newly appointed CEO Cook adds fuel to the fire during a Goldman Sachs conference, saying that "Apple doesn't do hobbies as a general rule," and that the company needs "something more main market" for the Apple TV to be a serious product category.
"Area of intense interest."
May 2012: At the D10 conference three months later, Cook steps up the rhetoric in an interview with Walt Mossberg and Kara Swisher, calling the TV market an "area of intense interest" for Apple. "I don't think Apple has to own a content business," he says. "We haven't had an issue getting content." The quotes stand in stark contrast to the state of the TV market, which is entirely predicated on cutthroat negotiations around cable-bundling deals.
September 2012: The rumors of "one more thing" featuring an Apple television at the September event turn out to be unfounded. Nonetheless, Apple announces its iPhone 5 and days later its stock price rockets to an all-time high of $702.10.
December 2012: Cook concludes 2012 with an appearance on Rock Center with Brian Williams, repeating almost word for word his discussion of TV as an "area of intense interest." (Amusingly, so little has happened in the intervening months that The Verge staff forgets the previous story and runs the quote again, using the exact same stock photo of an Apple TV.)
The interview comes during a media blitz designed to highlight Cook's leadership after a series of negative stories including iOS 6 Maps and the ousting of Scott Forstall; Cook's discussion of the TV project is impeccably rehearsed and flawlessly delivered. "It's a market that we see has been left behind," he says.
Apple does not release a TV in 2012 and Cook stops talking about it almost entirely in 2013.
With no TV to show, what about wearables?
February 2013: Instead, rumors begin to swirl of an Apple smartwatch, beginning with twin New York Times and Wall Street Journal reports. The Times specifically reports that both Cook and the company's senior VP of engineering, Bob Mansfield, are "particularly interested in wearables." Two days later, those reports are further bolstered by a Bloomberg Businessweek article that claims Apple is "beyond the experimentation phase" with the watch, and that the company needs a new high-growth product category to calm nervous investors.
March 2013: Bloomberg Businessweek follows up with a report saying Apple will release a watch by the end of the year. The Verge's sources corroborate the report, and add that the decision to have the watch run iOS has caused battery issues with the device.
"Exciting new product categories."
April 2013: Days before Apple's Q2 2013 financial resuls, Apple stock drops below the symbolic $400 barrier for the first time since 2011. Cook speaks with analysts on the earnings call and notes his frustration with the stock price. He also teases "the potential of exciting new product categories," adding that the company is "hard at work on some amazing new hardware, software, and services that we can't wait to introduce in the fall and into 2014." The statement is later carefully parsed by John Gruber to reveal that Cook managed to avoid actually promising any new products in 2013. (Cook offers a similar interpretation on yesterday's Q4 call.)
May 2013: Tim Cook goes back on the D stage with Walt Mossberg and Kara Swisher and downgrades the TV to an area of "great interest" with a "grand vision," but declines to answer any further questions. Instead, Cook tells Walt and Kara that wearable technology is "profoundly interesting," and says that the wrist is a "natural" place to wear something. "I think this group will be very involved in this," he says.
July 2013: Apple begins filing "iWatch" trademarks around the world. With Apple stock at $409.22, the Q3 2013 analyst call in July reveals few surprises, except when CFO Peter Oppenheimer makes sure to note his excitement about new products Apple will reveal "in the fall and across 2014."
Significant, great, profound, intense, exciting, and nowhere to be seen
September 2013: Apple holds an event to announce the new iPhone 5S and 5C and an October event to reveal the new iPad Air, iPad mini with Retina display, updated MacBooks, and the new Mac Pro, but it appears the company will not enter any new categories in 2013.
October 2013: Cook opens Apple's Q4 call with prepared remarks that directly reference "significant opportunities" in "both current product categories and new ones." Asked directly about his previous comments regarding new product categories, Cook says he stands by them, but adds that "we believe we can build great new products in areas we do not participate in today." Overall, Apple stock has risen back to $529.38, but falls 3 percent on the day's results anyway.
And that brings us to today. It's been over two years of Tim Cook and Apple discussing or leaking new product categories, with nothing to show for it thus far. But Cook is one of the most polished and rehearsed executives in the entire world — he says things for a reason. Why all this talk of new products?
In a word: growth.
Apple's been delivering almost nonstop product growth across the iPhone and iPad businesses for years now, and investors are clamoring to hear that there's another rocket ride to come as some of that growth appears to be tapering. That might be unfair or shortsighted — Apple's almost certain to have a strong holiday quarter of sales with new iPads and iPhones in stores — but there's no denying that Cook and his team have carefully laid the foundation for an entry into a new market.
The only real questions are whether Apple decides to deliver on that foundation in 2014 — and which new product category it decides to enter.
Aaron Souppouris contributed to this report.