John Ternes, whom Apple named as its new chief executive on April 20, is known to share many of the defining characteristics of Tim Cook, the man he is replacing: likable, steadfast, fundamentally a company man. But in the midst of one of the biggest technological upheavals in history, that may not be enough. The question is, can he also summon the amazing magic of Mr. Cook’s even more illustrious predecessor, Steve Jobs?
Illustration: The Economist/Getty Images (Getty Images)
Mr Turnas, Apple’s 50-year-old hardware chief, will take over in September, at which time Mr Cook, 65, will become executive chairman after a remarkable tenure as Apple boss. Since he replaced Jobs in 2011, the company’s sales have quadrupled to $416 billion, and its shares have outperformed the S&P 500 by a wide margin (see chart). Under his watch, Apple’s market value has increased from $350 billion to $4 trillion (about $700 million for each day of his tenure). iPhone sales are breaking records. Its services business, which also includes app-store revenues, is growing double digits annually. As chief executive, Mr. Ternes’s first product launch later this year is likely to be a foldable phone, which Apple devotees have been eagerly awaiting. The transition is ready to look picture-perfect.
Yet under Mr. Cook, Apple’s success was due to steady operational improvements in its supply chain, particularly in China, rather than revolutionary products. Cornerstones of his tenure were innovations carried over from the Jobs era, such as the Mac, the iPhone, and the App Store. He served Apple brilliantly in the Internet era. But since the dawn of the artificial-intelligence era, with the launch of OpenAI’s ChatGPT in 2022, Apple’s response has been half-hearted. Mr. Turnus has to do better.
No one expects him to take Apple on the big-spending path of its big tech rivals, which are spending hundreds of billions of dollars on data centers. But its early efforts to integrate AI into its products were embarrassing. Its highly publicized “Apple Intelligence,” which aimed to provide AI service to users of Apple devices, flopped when it was unveiled nearly two years ago. After suspending its own efforts to build a foundation model, the company is now relying on rival Google’s Gemini family to dig out its AI hole.
The first feather in Mr. Turnas’s cap, even before he takes over, will show that the Gemini-powered Siri can behave less like a clumsy automaton and more like a smooth-talking AI assistant when it is shown off at Apple’s marquee developers conference in June. In a sign that Apple knows it has a problem, it has significantly reshuffled its AI leadership team in the last year.
Yet Mr. Ternes’s promotion, and a powerful new role for Johnny Sruzzi, who has helped lead Apple’s chip strategy, suggest the company is betting primarily on hardware rather than software to drive it forward, on the assumption that AI models will eventually become commoditized. “It’s like if I’m promoting a hardware guy to CEO, I want the innovation to come from the hardware side,” speculates Gil Luria, an analyst at DA Davidson, an investment bank.
difficult problems
When it comes to hardware, Apple’s new boss could take two courses of action. One is to make the company’s existing products so ubiquitous that they will almost inevitably become the largest consumer interface to AI. The recent achievements of Mr. Ternes, who takes over as hardware chief in 2021, suggest he may lean in this direction. Consider the enthusiastic response to the iPhone 17, launched last September with Apple’s latest in-house chips, which has led to one of the biggest upgrade cycles in years. Or consider the rollout of the $599 MacBook Neo in March aimed at luring low-budget buyers away from Microsoft-based PCs. The Neo has reportedly been sold out this month. The Mac mini, which was launched in 2024 as an ultra-compact PC with no screen, has also taken off in recent weeks as users find it ideal for running always-on AI agents like OpenGL.
Apple’s edge in hardware is supported by its custom silicon. Its performance-enhancing chips make the Mac the computer of choice for the higher end of the market, and its use of iPhone chips in the Neo is now helping it reach the lower end too, according to Ben Thompson of Stray Cherry, a newsletter.
If Mr. Ternes “does nothing but keep the ship running,” Apple could nearly double its number of devices globally from 2.5 billion to 4.5 billion over the next 15 years, believes Horace Dedeau, a veteran Apple analyst. This will be a huge platform on which AI apps can be run and monetized. As soon as users subscribe to ChatGPT or other AI apps, “Apple will just take a cut,” Mr. Dediu says. According to one estimate, Apple is close to generating $1 billion in AI revenue through the App Store so far this year, despite not having any major AI products.
Azim Azhar, author of another newsletter, Exponential View, says that to overcome the bottlenecks in cloud-based AI, routine queries could be moved to “edge” devices, creating a huge opportunity for Apple. According to Mr. Azhar, the future will involve “the integration of highly portable phones with persistent desktops or servers. Both are in line with Apple’s strengths.”
However, a more radical path is available to Mr. Turnus, which is to develop a new “form factor” beyond the iPhone that is more suited to the interactive nature of AI than doomscrolling on a touchscreen. Competitors are already trying to turn smartphones into the technology of tomorrow. Social-media giant Meta, run by Mark Zuckerberg, is selling millions of AI-powered smartglasses. Design guru Sir Jony Ive, who helped Jobs create the iPhone, has teamed up with OpenAI to develop a new gadget of unknown size. To survive, Mr. Ternes will have to reinvigorate Apple’s product line-up with a determination that Mr. Cook lacked.
Apple’s Vision Pro virtual-reality headset, though an overpriced flop, could help the new boss develop Apple smartglasses. The company is also reportedly working on a wearable AI pin. Mr. Dedeau says one of Mr. Ternes’s main strengths may be his devoted following among Apple’s engineers, who have been critical to the company’s success. “Turnus will come across as an engineer’s engineer,” he says. “He’s fanatical. That can energize teams.”
Even if Apple’s new boss revives its innovation mojo, he will face other problems. The company is in the process of reducing its dependence on Chinese manufacturing, but has not yet fully engaged in alternative production regions such as India and South-East Asia. At least Mr Cook, who is experienced in resolving geopolitical tensions, is expected to continue to do so as head of Apple’s board.
But that means Mr Turnas will also have to oversee his predecessor. In the case of some changes — like Bob Iger’s worrisome appearance at Disney, after stepping down for the first time as boss of the entertainment giant — this could be a liability. With luck, Mr. Cook will become more of a supporting force. Still, he leaves big shoes to fill. There’s an old saying that you don’t want to be a chief executive who follows a legend. In Mr. Turnas’s case, he has to follow two of them.
To keep track of the trends shaping commerce, industry and technology, sign up to “The Bottom Line,” our weekly subscriber-only newsletter on global business.
