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Business Impact

Tim Cook’s New Year’s Resolutions

This might be some of what’s on the Apple chief executive’s mind in 2017.

While many of us are starting the new year resolving to hit the gym and spend less money, the CEO of the world’s most valuable company has a few other things to worry about. Here’s our guess at what Tim Cook’s 2017 resolutions might look like.

1. Keep manufacturing in China

President-elect Donald Trump says he has asked Cook to move manufacturing to the U.S., and Foxconn, the contract manufacturer that makes the company’s iPhones, has said it has plans to invest in the country. But there are several important reasons why Apple would be unlikely to make iPhones domestically. For one, it would add significantly to the price of a phone whose newest model already costs $649 and up. And even if Apple wanted to do it, the extensive supply chain and expertise that have built up around smartphone manufacturing in China would be nearly impossible for any other region to replicate, says Willy Shih, a professor at Harvard Business School. Though Chinese phone makers outsell Apple, the Apple brand is quite strong in China, and local manufacturing can only help the company grab more share in the world’s biggest market.

2. Make more time to meet with tax attorneys

It’s possible that U.S. corporate tax rates may drop under the Trump administration. Cook has said that would have to happen before he would consider exposing the $215 billion that Apple currently holds in overseas cash and investment accounts to U.S. taxation. But until then, Cook will certainly continue his staunch defense of his company’s complicated tax structure, which collects overseas profits into an operation based in Cork, Ireland—an operation that pays very little tax because of favorable Irish laws. Indeed, if Congress does not lower corporate tax rates, under new international agreements to reduce tax avoidance, many multinationals, including Apple, could come under pressure to shift abroad certain aspects of their business including creative and research and development functions according to a 2015 paper by economist Michael Mandel of the Progressive Policy Institute.

3. Push Apple Pay

Since the digital payment system launched in 2015, making it possible to buy things with a wave of an iPhone, Apple Pay has largely stalled. Out of every 20 people with an Apple Pay–enabled phone, only one is using the service. Even so, payments are too big an opportunity for Apple to abandon.

4. Lift the veil a little

Under founder Steve Jobs, Apple was notoriously secretive. Now artificial intelligence might push the company to share a little more. Like Google, Baidu, Facebook, Microsoft, Twitter, Uber, and much of the rest of Silicon Valley, Apple is putting a big push on AI. But it found that keeping its AI work secretive was hampering its efforts. In October, it hired a leading researcher in the field, Ruslan Salakhutdinov, as director of AI research. As has become the norm in the field, Salakhutdinov will continue teaching, in his case at Carnegie Mellon University. He teaches deep learning, a technology with which computers learn to perform tasks by absorbing large amounts of training data. He will presumably continue to publish fundamental research as well, even as he builds a team of researchers at Apple, who will focus on speech and image recognition as well as natural language processing.

5. Keep doing what we’re doing

During Cook’s five-year tenure at the top, Apple has taken some heat for underperforming products like the Apple Watch and Apple TV. But Cook’s expertise in execution has nevertheless helped revenue double. He probably shouldn’t worry about failing to come up with a product to rival the iPhone—especially since doing so is extremely unlikely.

Keep up with the latest in Apple at EmTech Digital.

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