At Apple this week, it was the end of an era.
After 15 years as CEO, Tim Cook stepped aside, replaced by longtime executive John Ternus. As my colleague Sebastian Herrera wrote in a just-published profile of Ternus, he steps up at a tense moment for the $4.75 trillion company:
Cook has made Apple a cash-flow king and one of the world’s supply-chain titans, but as Ternus inherits the iPhone-maker from the legendary CEO, Apple is grappling with questions about its strategy on artificial intelligence, where it is facing competition from hot upstarts like OpenAI. Meanwhile, a memory chip shortage threatens to squeeze its margins, its revenue growth is slowing, and even longtime Apple fans admit the maker of aspirational tech has lost some of its product design mojo.
Though Apple accounts for roughly one in five smartphones shipped worldwide, it’s been a while since the company truly surprised consumers. Recent launch events have mostly settled into a predictable cadence of incremental camera upgrades and routine spec bumps. There have been notable misfires, too, including the Vision Pro headset and updates to its Siri voice-activated assistant. Major software overhauls, like the polarizing Liquid Glass iOS redesign, faced sharp criticism over legibility and performance. Meanwhile, Apple’s long-rumored foldable phone will arrive years after competitors like Samsung defined the category.
The stakes are even higher now in many ways, because every tech company that matters in Silicon Valley is racing to build out new form factors specifically designed for the AI era. That poses a massive risk for Apple, which has been behind the curve in popular products like AI-enabled glasses.
Apple’s role in the private markets has been somewhat muted in the AI era. Far from a cutting-edge AI leader, the company’s a sometime acquirer (in January, Apple announced its almost $2 billion acquisition of audio AI startup Q.ai, its second-largest deal ever). A massive shift might be coming under Ternus’s leadership. As Herrera writes:
Some Apple analysts told Fortune that Ternus’s product background is exactly the kind of expertise Apple needs at this moment.
Ternus “has the opportunity to be more prescriptive about device design and about preferences around [the user interface],” said Bank of America analyst Wamsi Mohan, who wrote in a recent note that Apple’s move away from a net cash neutral financial strategy indicated it could devote more investment toward research and development, capital expenditures, and acquisitions, which may be required for Apple to keep pace in the AI era.
Right after Labor Day, on Sept. 9, Ternus will appear at Apple’s big product event. And a new era will begin. In the meantime, read Sebastian’s whole story here.
ICYMI… Oura, maker of the ubiquitous smart ring, yesterday officially filed to go public on the Nasdaq. The company’s VC backers include Iconiq and Gradient Ventures. Check out the video story I hosted on Oura, Tonal, and the future of AI in health and fitness here.
Have a great long weekend, and we’ll be back on Tuesday,
Allie Garfinkle X: @agarfinks Email: [email protected]
Submit a deal for the Term Sheet newsletter here.
Joey Abrams curated the deals section of today’s newsletter. Subscribe here.
The post John Ternus takes the helm at Apple, as AI pressure hits appeared first on Fortune.
