* Cook needs transformative product in a few years
* Expectations high that he'll push Apple into TV market
* A sharp negotiator but can he make product leap?
By Sinead Carew and Edwin Chan
NEW YORK/SAN FRANCISCO, Aug 26 Tim Cook has big
shoes to fill and he can't do it by just pushing out snazzier
versions of the iPhone or iPad.
Apple Inc's (AAPL.O) newly minted CEO needs a revolutionary
product to prove he has the chops to succeed Steve Jobs, and that
may be a full-on assault on the living room by as early as 2013,
analysts and industry experts say.
Jobs has called Apple TV -- a 4-inch-square box launched in
2006 that connects your plasma or LCD TV to the Web -- a hobby,
but it is also one of the rare missteps in the course of Apple's
If Cook can succeed where Jobs has failed, he would put to
rest questions over whether he has the vision to lead Apple, in
addition to widely respected operational skills.
"The TV is the obvious gap in Apple's product line up," CCS
Insight's John Jackson said. "There's pressure to constantly
innovate, (but) there's more than sufficient momentum at Apple
right now that they don't need to reinvent the movie screen the
TV, the car or the horse and buggy in the immediate term."
Getting Internet programming off computers and onto television
sets has long been viewed as the next big thing for consumer
technology companies, but none has succeeded so far with a product
that has gained wide appeal.
Cook and the $350 billion company he now leads would be
jumping into a field crowded with Microsoft (MSFT.O), Google
(GOOG.O), Sony (6758.T) and Samsung (005930.KS).
"The Holy Grail is the living room," said David Rolfe at
Wedgewood Partners, which devotes 9.5 percent or about $1 billion
of its portfolio to Apple. "They would get into it, only if they
can make a significantly better product than what currently
It remains far from clear what Jobs -- and now Cook -- intends
on the TV front. There are persistent rumors that Apple may
produce an actual television to go along with content in an iTV,
as part of the ongoing debate over whether the beleaguered
television industry is ripe for an Apple-style shake-up.
The current market offers a confusing array of options -- from
video streaming through game consoles like Microsoft's Xbox to
Google-powered TV sets from Sony, Samsung and others.
Apple has "been the early follower in the iPad-tablet space,
been the early follower in the music space, the early follower in
the smartphone space," said independent digital media strategist
Mark Mulligan. "They wait for a market to get primed, learn from
the mistakes and then go and do everything better than anybody has
Analysts estimate Apple takes roughly five years to develop a
wholly new product, so either Jobs has already started down the TV
road or Cook needs to start thinking now.
Chief among the obstacles would be concerns in the
entertainment industry about potentially aggressive video
licensing terms that Apple would seek -- and has gotten in the
past for music and video licenses on iTunes. Executives say Apple
had asked for 30 percent of rental fees for iTunes, which is
blamed for smothering the music recording industry.
THE ROLE OF CHARISMA
Jobs' charisma and negotiating power were crucial to the
launch of iTunes in 2009 and the then-unprecedented sale of songs
rather than albums on the Web. Cook remains untested on this
front, despite his deft hand dealing with the supply chain
partners that make Macs, iPhones and iPads.
"It was Steve's rock-star status that convinced these guys,
they were in awe of him," said a former major recording label
executive involved in the negotiations before iTunes was launched.
"Without him Apple would never have been able to pull off that
There's some evidence that Cook can be as tough at the
negotiating table. Peter Misek at Jefferies cites Cook's command
of the iPad 2 rollout, and his firm stance this year when the
Japan earthquake and tsunami threatened to turn off one of the
world's largest semiconductor-component spigots.
"Cook was able to double or sometimes triple source component
suppliers," Misek said. "To date, no competitor has been able to
gain meaningful share in the tablet market and ... Cook's
leadership during the introduction was critical to this."
Now, the former Compaq executive needs to prove that he can
not only execute his boss's vision and keep Apple's fabled product
pipeline alive, but that he can also make that intuitive leap to
tell consumers what they want.
Wall Street will be watching.
"The market and the organization needs to see that Tim has the
judgment to pick a winner," said Jane Stevenson, vice chairman of
Board and CEO Services at Korn/Ferry International.
"The market will need to see a continued stream of innovation
that has his fingerprints on it," ranging from launching new
products to turning around products that haven't much success,
like Apple TV.
(Additional reporting by Poornima Gupta and Sarah McBride in San
Francisco and Yinka Adegoke and Jennifer Saba in New York, editing
by Tiffany Wu; Phil Berlowitz)
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