Inside Apple

60-MINUTES-01

MINUTES-01

and it finds itself at the heart of some of the biggest issues facing

American companies today: the way terrorists may be using encrypted

technology to plot attacks, the battle over the corporate tax rate, and the

challenges of working in China. We talked about all of that with Apple CEO

Tim Cook as part of a journey through the world`s biggest and richest

company.>

TIM COOK: One of the great things about Apple is, we-- we probably have more secrecy here than the CIA.

CHARLIE ROSE (voiceover): Not only is Apple secretive, but CEO Tim Cook doesn`t do many interviews. He agreed to speak with us and to give us a rare look inside Apple--to see how its products come together, and to witness the company`s biggest project ever. But we couldn`t see everything. A lot of it was covered up, especially at the super-secret design labs run by Jony Ive.

I see these covers over some of these desks.

JONY IVE: That`s so you can`t see what`s underneath it, Charlie.

CHARLIE ROSE: And that`s why you don`t like people in this room, period.

JONY IVE: That`s right. We don`t like people in this room, period.

***

LESLEY STAHL: How do you think you did in this movie? Rate yourself.

MICHAEL CAINE: Secretly with myself I regarded it as the best thing I ever did. It was the most difficult. And the criterion for that is I made it look the most easy.

LESLEY STAHL (voiceover): Youth is set in the Swiss Alps. Michael Caine plays Fred Ballinger, a retired, celebrated composer and conductor who has turned his back on music. But he can`t help finding it everywhere.

(Excerpt from Youth)

***

STEVE KROFT: I`m Steve Kroft.

LESLEY STAHL: I`m Lesley Stahl.

BILL WHITAKER: I`m Bill Whitaker.

CHARLIE ROSE: I`m Charlie Rose.

SCOTT PELLEY: I`m Scott Pelley. Those stories tonight on 60 MINUTES.

(ANNOUNCEMENTS)

INSIDE APPLE

CHARLIE ROSE: Apple is one of the most interesting business stories in generations and it finds itself at the heart of some of the biggest issues facing American companies today: the way terrorists may be using encrypted technology to plot attacks, the battle over the corporate tax rate, and the challenges of working in China. We talked about all of that with Apple CEO Tim Cook as part of a journey through the world`s biggest and richest company. What is it that makes Apple so innovative and so profitable, and yet so secretive, almost obsessively secretive? Apple agreed to let us in, to an extent, beginning at the annual launch in September of Apple`s new products.

(Begin VT)

WOMAN: Go.

(Crowd cheering)

TIM COOK: Thank you. Thank you. It`s been an incredible year for Apple.

CHARLIE ROSE (voiceover): Tim Cook has been running Apple for the past four years, but for most of the fifteen years before that--

STEVE JOBS: We`ve had some real, revolutionary products.

CHARLIE ROSE (voiceover): --the stage belonged to Apple`s late cofounder Steve Jobs.

STEVE JOBS: We`re going to make some history together today.

CHARLIE ROSE (voiceover): Jobs transformed the computer from a cumbersome machine into perhaps the most personal and sleek consumer product of all time. The iPhone is twelve thousand times more powerful than the original Macintosh, and next year it will have sold one billion units. Following Steve Jobs was one of the most challenging successions imaginable, a daunting responsibility for the man he handpicked--Tim Cook.

TIM COOK: I`ve never met anyone on the face of the earth like him before. And it was a privilege--

CHARLIE ROSE: Never met anyone on the face of the earth--

TIM COOK: No one.

CHARLIE ROSE: --like him?

TIM COOK: No one.

CHARLIE ROSE: Not one person?

TIM COOK: Not one.

CHARLIE ROSE: Who had?

TIM COOK: Who had this incredible and uncanny ability to see around the corner. Who had this relentless driving force for perfection.

CHARLIE ROSE (voiceover): The spirit of Steve Jobs hovers over Apple. He was a founder like no other: a volatile visionary capable of creating products people wanted before they even knew it. Cook is a measured and passionate engineer from Alabama. On the Apple campus, employees still talk about Steve Jobs in the same way that Tim Cook does.

TIM COOK: It`s a bar of excellence that merely good isn`t good enough. It has to be great. As Steve used to say, "Insanely great."

CHARLIE ROSE: You believe you can do things other companies can`t do.

TIM COOK: You do. You do. We all do. And we have. Fortunately.

CHARLIE ROSE (voiceover): It begins on the Apple campus at 9 AM, every Monday morning at the executive team meeting.

I`m from 60 MINUTES and I`m in search of the brains of Apple, and someone said go in this room and you`ll find them. Is this the place?

TIM COOK: No, no, this is not the place.

CHARLIE ROSE (voiceover): Attendance is mandatory. If you are in this room you are one of the most important people at Apple. They wouldn`t let us attend the meeting, but they were eager to tell us what they like so much about their company. That`s Jeff Williams, officially named the new chief operating officer this week. That`s Eddy Cue. He is the guy who helped create iTunes.

EDDY CUE: It`s amazing to be able to work in a place where you`re building products that everybody in the world uses. Whether it`s a two-year-old or a hundred-year-old, they get to experience the products that we`re building and that`s amazing.

CHARLIE ROSE: Is the DNA of Steve Jobs baked deeply into everything just said?

TIM COOK: It is. It is. This-- this is Steve`s company. This is still Steve`s company. It was born that way, it`s still that way. And so his spirit I think will always be the DNA of this company.

CHARLIE ROSE (voiceover): And if there was anyone at Apple who comes close to sharing Jobs` DNA it would be this man, Jony Ive, Apple`s chief design officer. He`s considered by many at Apple to be the most important person at the company. Every Apple device on the market today was either created or inspired by this reserved and polite son of a British silversmith. We met Ive in his design studio, but Apple`s preoccupation with secrecy allowed us to see only so much.

What`s interesting in this room is that I see these covers over some of these desks. You know, why is that?

JONY IVE: That`s so you can`t see what`s underneath it, Charlie.

CHARLIE ROSE: What? Meaning if I could see what`s underneath it, I would know where the future is of Apple?

JONY IVE: You`d know what we`re working on next. And so that`s one of the reasons that-- that-- that it`s extraordinarily rare that people come into the design studio.

CHARLIE ROSE: And that`s why you don`t like people in this room, period.

JONY IVE: That`s right. We don`t like people in this room, period.

CHARLIE ROSE (voiceover): Ive`s team of twenty-two designers are a very close group, in fifteen years only two have left the company. We noticed that Ive`s studio is quiet and looks a lot like an Apple store. No coincidence, Ive designed both around his signature wooden tables. Here, Ive and his team create prototypes of future products before the specifications are sent overseas to be manufactured. With the iPhone 6 and 6 Plus, the design team made ten different-sized models before deciding which worked best.

JONY IVE: And we chose these two because partly they-- they just felt-- they felt right, they-- they somehow, not-- not-- not from a tactile point of view. But just emotionally they felt like a good-- a good size.

CHARLIE ROSE: Do you do this about every product, this amount of dedication to emotional context?

JONY IVE: This is the tip of the iceberg. Because we`ve found that different textures considerably impact your perception of the object, of the product, what it`s like to hold, and what it`s like to feel. So the only way that we know how to resolve, and address, and develop all of those issues is to make models is to make prototypes.

CHARLIE ROSE (voiceover): Ive also showed us how he prototyped the Apple Watch. It begins with a sketch of the watch casing. Then a computer-aided- design specialist transforms the sketch into a 3-dimensional electronic blueprint. That is sent to this high-precision milling device known as a CNC machine.

JONY IVE: We attach to this fixture in there a block of aluminum. And the cutter that you can see there in this CNC machine is now machining incredibly accurately the form at the back of the watch--

CHARLIE ROSE: And creating the round edges.

JONY IVE: -- is creating. Yeah. And all of the tiniest details as well.

CHARLIE ROSE (voiceover): Once it`s been carved, the prototype of the watch casing is sanded and polished by hand by veteran craftsmen. Ive`s team oversees every design detail, including testing hundreds of different hues and shades of red, blue, and yellow for the watch bands.

JONY IVE: All of these things I think in aggregate, if we manage to get them right, you sort of sense that it`s an authentic, really thoughtfully conceived object.

CHARLIE ROSE (voiceover): Ive described the process that comes next. Turning a prototype into a working product requires a high level of complex engineering. When he wanted to make the new Macbook Apple`s thinnest and lightest laptop ever, Ive worked with Apple`s head of hardware engineering Dan Riccio to create a battery powerful enough to last all day but also small enough to fit into Ive`s slim case design.

DAN RICCIO: Every tenth of a millimeter in our products is sacred.

CHARLIE ROSE: Every tenth of a millimeter is sacred--

DAN RICCIO: With this design, it involved, you know, mechanical designers, toolmakers chemists, and it also involved software engineers to go off and design a pack that would fit within the surfaces with-- of the product, but still work reliably.

CHARLIE ROSE (voiceover): One of the most complex engineering challenges at Apple involves the iPhone camera, the most used feature of any Apple product. That`s the entire camera you`re looking at in my hand.

How many parts are in here?

GRAHAM TOWNSEND: There`s over two hundred separate individual parts in this-- in that one module there.

CHARLIE ROSE (voiceover): Graham Townsend is in charge of a team of eight hundred engineers and other specialists dedicated solely to the camera. He showed us a micro suspension system that steadies the camera when your hand shakes.

GRAHAM TOWNSEND: This whole sus-- autofocus motor here is suspended on four wires. And you`ll see them coming in. And here we are. Four-- these are forty-micron wires, less than half a human hair`s width. And that holds that whole suspension and moves it in X and Y. So that allows us to stabilize for the hand shake.

CHARLIE ROSE (voiceover): In the camera lab, engineers calibrate the camera to perform in any type of lighting.

GRAHAM TOWNSEND: Go to bright bright noon. And there you go. Sunset now. There you go. So, there`s very different types of quality of lighting, from a morning, bright sunshine, for instance, the noonday light. And then finally maybe--

CHARLIE ROSE: Sunset.

GRAHAM TOWNSEND: Sunset. Yeah.

CHARLIE ROSE: Dinner--

GRAHAM TOWNSEND: We can simulate all those here. So believe it or not, to capture one image, there`s twenty-four billion operations go on.

CHARLIE ROSE: Twenty-four billion operations going on--

GRAHAM TOWNSEND: Just for one picture--

CHARLIE ROSE: Capture.

GRAHAM TOWNSEND: Yeah.

CHARLIE ROSE (voiceover): The company is known for focusing as much energy on how products are marketed and sold as it does on the way they`re designed and built. We weren`t sure what to make of it when Apple took us to this unmarked warehouse off the main campus. Inside we found yet another prototype--a mock store where Apple`s head of retail Angela Ahrendts is continually refining new designs for Apple`s four hundred and sixty-nine stores worldwide.

How many iterations of what I`m looking at have you gone through?

ANGELA AHRENDTS: Oh, I mean, honestly there are meetings in here every single week. And-- and there`s a floor set. We use this as a stage, and we say this is rehearsal.

CHARLIE ROSE (voiceover): Ahrendts wants customers to be transfixed from the moment they walk through the doors.

ANGELA AHRENDTS: The most important goal is, is that it is dynamic. People are used to living on their phone. So they`re used to being dynamic, emotive, immersive. And so how do we make sure when they walk into a store they say wow?

CHARLIE ROSE (voiceover): Apple`s huge profit margins--roughly forty percent across the board--have made it the most valuable company in the world, worth about six hundred billion dollars. People may love their Apple products, but if there is one complaint you hear a lot, it`s that by the time you buy one, a newer, better version is already on the way. Apple`s head of marketing Phil Schiller admits that the company often pits one product against another.

Is there danger of one product cannibalizing the other product?

PHIL SCHILLER: It`s not a danger, it`s almost by design. You need each of these products to try to fight for their space, their time with you. The iPhone has to become so great that you don`t know why you want an iPad. The iPad has to be so great that you don`t know why you why you want a notebook. The notebook has to be so great, you don`t know why you want a desktop. Each one`s job is to compete with the other ones.

CHARLIE ROSE (voiceover): The first new product to come from Apple since Tim Cook took over as CEO was the Apple Watch.

(Crowd cheering)

CHARLIE ROSE (voiceover): There is intense speculation about everything Apple does, including that the watch may not be the breakout product Apple had hoped. It has been on the market for eight months, but Apple has not released any sales figures.

You think it`s a product that needs improvement?

TIM COOK: I think all products are going to be--

CHARLIE ROSE: I`m going to interrupt. Of course, I know that.

TIM COOK: Yeah. And-- I think the watch is no exception to that, is we`re-- we`re going to --continue to fine tune--

CHARLIE ROSE: So you`re disappointed in some of the things.

TIM COOK: I`m not disappointed in it. It`s every par--

CHARLIE ROSE: But you saw room to improve it?

TIM COOK: Charlie, when we-- when we launch a product, we`re already working on the next one, and possibly even the next, next one. And so yes, we always see things we can do.

(Crowd cheering)

TIM COOK: This is the future of television, coming now.

CHARLIE ROSE (voiceover): And then there is Apple TV and suggestions that Apple wants to do much more in the television business, as well as speculation about Apple developing a car. But Tim Cook is keeping that a secret too.

How hard is it to say Apple will be in the car business? But okay, I mean, how hard is it to say yes we`ve done this, we`re looking into it. We may very well go there, how hard is that?

TIM COOK: One of the-- one of the great things about Apple is we-- we probably have more secrecy here than the CIA.

CHARLIE ROSE (voiceover): Whatever secret products Apple may be working on, no one feels the pressure to deliver more than Jony Ive.

Is there any possibility that Apple can get too rich and too fat and too complacent?

JONY IVE: That possibility absolutely exists. I think one of the things that characterizes the way that we work is that our heads tend to be down at these tables worrying about what we`re doing. And our heads don`t tend to be up, looking around at what we`ve--

CHARLIE ROSE: Thinking how great we are, what we achieved?

JONY IVE: Yeah. And we`re more aware of the distance between us and the perfection that we`re chasing than-- than ever before.

(End VT)

CHARLIE ROSE: Apple has one million people manufacturing its products in China. Why doesn`t it bring those jobs home? That part of the story when we return.

(ANNOUNCEMENTS)

END

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