Apple to Crank Up Store Openings After Winning Real-Estate Bet

SAN FRANCISCO -- Apple will be at the high end of its annual range of 25-50 store openings this year, reflecting a winning bet on real estate prices, its second-in-command said Tuesday at the Goldman Sachs conference.

"Somewhere in 2008, the world started to fall apart, and it really fell apart in 2009,” said Chief Operating Officer Tim Cook. The company concluded that “top properties would come on the market with better economics” because of the financial shake-out, he said. Apple pulled back to the bottom of its range last year and is roaring ahead this year to take advantage of having been right, Cook said.

Cook said the Apple Store on the Upper West Side of Manhattan, opened in November, “will make your jaw drop. It’s just so incredible to look at from outside.” He called the store at the Louvre in Paris comparable. A “mind-blowing” store is coming to Shanghai in the summer, and London is getting one, too, Cook said. He also proclaimed Apple “the largest digital-content distributor in the world.” Cook has been with the company more than 11 years. He doesn’t get the spotlight at Apple’s public events with colleagues led by his boss, CEO Steve Jobs, who looked very skinny in his most recent public appearance, in January, after having had pancreatic cancer and a liver transplant.

The iPad will be sold at first through Apple’s own channels -- its online and physical stores and education-sales operation -- and through other retailers only with “really great assisted sales,” such as at the company’s store-in-store at Best Buy and abroad through Apple’s premium resellers, Cook said. “Over time, we'll expand” distribution,” he said, adding, “I'm very anxious to get it out where people can play with it."

The company is offering a low-end model under $500 because “we don’t want to leave a pricing umbrella for competitors,” Cook said. “So we [went] very aggressive on this.” He said he isn’t “losing any sleep” over any “cannibalization” of sales of older products by the iPad. Netbook makers have more to worry about, Cook suggested. The little computers “are an experience that people are not going to continue to want to have."

There’s a tradeoff between having more than one carrier in a market supporting iPhones -- which increases sales if the providers have “strong relationships with their customers” -- or having an exclusive, which makes it easier for Apple to innovate with the carrier, as it did on digital voicemail, Cook said. Apple added carriers in Canada, the U.K., France, Singapore and around Scandinavia last year, he said. “I was pleasantly surprised that in every single country our units increased significantly and our share with it.” But Cook said he wouldn’t predict the same result everywhere and the company judges each country separately.

"Apple TV is still a hobby,” Cook said: “We've been very clear about that.” The company didn’t make the point, however, at the product’s splashy introduction. The market for getting video from the Internet onto TV sets is still “very small,” but Apple remains “very interested” in the business, he said. “We continue to invest in it because our gut tells us something’s there,” Cook said. Last year, the company improved the user interface, he said. Still, “the go-to-market model” is very difficult for Apple, because indications are that the connecting technology will be inside sets, and “we have no interest in the TV market” as a new product category for the company, Cook said.

Apple has a great advantage in digital devices, content and communications from controlling its own software platforms and devices, Cook said. “Very few companies can manage a platform, and we've been doing this more than 30 years."

If the company finds an attractive large corporate acquisition, “we won’t be shy about it,” Cook said. “But we won’t do it to do it.” Apple’s goal is not to “be the biggest,” but to have the best products, he said. “We have looked at large companies,” but “we haven’t let money burn a hole in our pocket” and acquisitions “have been on the small side,” Cook said.