This is Tim: Cook at the 2013 Goldman Sachs conference

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In terms of large acquisitions, we have looked at large companies. In each case thus far, it didn’t pass our test. It didn’t pass our test for various reasons, and we’ve looked at more than one. Would we look again? I’m sure we will. Is there a reason why we couldn’t do that? No. I think we have the management talent and depth to do it. But we’re disciplined and thoughtful and we don’t feel a pressure to just go out and acquire revenue. We want to make great products, and that’s what we’re about. And so if a large company could help us do that even better, than that would be of interest. But again, deliberate, thoughtful is our mantra. The cash is not burning a hole in our pocket.

On innovation, skills, and leadership at Apple

It’s never been stronger. The innovation is so deeply embedded in Apple’s culture: the boldness, the ambition, the belief that there aren’t limits, the desire among our people to not just make good products but make the very best products in the world, it’s as strong as ever, it’s deeply embedded, it’s in the values, it’s in the DNA of the company.

And so I feel fantastic about it. There’s no better place for innovation. Apple is the center of innovation. Now, if you look at some essentials for innovation, there’s no formula; if there was a formula, there would be a lot of companies that have a lot of money that would have gone out and bought the ability to innovate. But some of the essentials, without releasing all the magic, for us are skills and leadership. Let’s talk about those for a little bit.

If you look at skills, Apple is in a very unique and in my view unrivaled position, because Apple has skills in software, in hardware, and in services, and the reality is that the model that grew the PC industry, where companies specialized in a thing, and then somebody did some integration towards the end, that model’s not working for what consumers want today. Consumers want this elegant experience, where the technology kind of floats to the background and the customer is at the center of that experience. Arguably, where you can innovate in hardware, you can innovate in software and you can innovate in services. The real magic happens at the intersection of these. And Apple has the ability on all three of these spheres to innovate like crazy and really cause magic.

And you know, the iPad’s very magical, and it’s exactly because a company was doing all of those things. And so, for many years, this idea—some people call this vertical integration, I really don’t care what it’s called, in some ways—but it was out of favor. People thought it was kind of crazy. And we never did. And so through all of those years, we continued to build, and these skills—this isn’t something you can just go write a check for. This is something that you work decades for, building this experience.

And so, I think we bring that, I think we’re unique in that, I think we’re unrivaled in that, I think there are people trying desperately to catch up in that, and I think they’re finding it not so easy to do.

Now, in terms of leadership, when I look around the executive team table, I see superstars. I see people that are at the very top of their game, I see people like Jony Ive who I think has the best taste in the world, who’s the best designer in the world. He’s now bringing his talents to our software as well, I’m just ecstatic about this. I see people like Bob Mansfield, who I think is the top silicon expert in the world. I see people like Jeff Williams, who, there’s nobody better in operations, anywhere. And I see Phil, and I see Dan, and I see Craig—I see all of these guys that are so focused on product, and are at the very top of their game, and it’s a privilege to be a part of that.

So I look at Apple and I see culture, deeply embedded; I see this incredible blend of skills that’s unprecedented, unrivaled, that can deliver these magical moments; and I see the leadership to pull it off. And I’ve never been more bullish on innovation at Apple.

On marketshare limits

Well, there’s that word “limit.” We don’t have that word in the Apple vocabulary.

In all seriousness, the people I work with don’t view that there are limits. And it’s because of that that Apple has been able to do so many things for so many years and done things that people didn’t know they ever wanted, and now can’t live without. And so, we don’t really think of the world as limits.

When I sort of zoom out and look at the smartphone market in particular, what I see is a market that last year was around 700 million [units], plus or minus. It’s projected to double in the next four years to 1.4 billion—this is a huge market. I believe that more on a longer-term basis, all phones will be smartphones, and there’s a lot more people in the world than 1.4 billion, and people love to upgrade their phones fairly regularly.

And so I see a market that is incredible to be in, maybe one of the best markets of all time. Apple has enormous momentum. The 500 million that you referenced—that 500 million was done over the course from 2007 until the end of last year [2012], we flipped over 500 million. However, over 40 percent of that happened last year. And so there’s incredible momentum there, and across that period of time, we’ve built an ecosystem that is the best in customer experience on the planet.

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