Berkshire Hathaway‘s major investment in Apple shows that Warren Buffett understands the iPhone maker is really a consumer products company at its core rather than a technology company, Apple CEO Tim Cook told CNBC.
“[Buffett] has been very clear, he didn’t invest in technology companies and companies he didn’t understand. He’s been totally clear with that. And so he obviously views Apple as a consumer company,” Cook told CNBC’s Becky Quick in an interview that aired Monday.
“We believe that technology should be in the background, not the foreground, and that technology should empower people to do things and help them do things they couldn’t do otherwise,” said Cook, who attended this weekend’s Berkshire shareholders meeting in Omaha, Nebraska, for the first time.
“We’re in the tech industry,” Cook acknowledged. “But we work at that intersection of technology and the liberal arts and the humanities. And so we make products for people, and so the consumer’s at the center of what we do.”
As sales growth of its hardware business slows, Apple has been growing its services.
For example, in the March quarter, iPhone revenue, which accounts for more than half of Apple’s revenue, fell 17% from a year earlier. However, Apple has recently been signaling to investors that iPhone sales are not the critical number to watch. Instead, it’s been highlighting revenue from its services — including subscriptions like Apple Music and iCloud as well as products like AirPods and Apple Watch — which grew 16% in the first three months of 2019 compared with a year earlier.
While discussing what it means to have Berkshire in Apple’s corner, Cook said Buffett’s faith in the company “seemed like recognition” of this continuing evolution. “We run the company for the long term. And so the fact that we’ve got the ultimate long-term investor in the stock is incredible.”
Buffett, known as the Oracle of Omaha, has historically invested in technology sparingly, ending a difficult chapter last year in IBM while ramping up Berkshire’s now massive stake in Apple.
Last week, Buffett revealed to CNBC that Berkshire has been buying shares of Amazon but he’s not the one behind the purchases. Buffett has long admired Amazon and its founder and CEO, Jeff Bezos. He’s also many times talked about how he wished he invested in Amazon years ago.