Today, I\u2019m talking with Mark Gurman, who is the world\u2019s best-sourced Apple reporter \u2014 both as Bloomberg<\/em>\u2019s chief Apple correspondent and the host of the upcoming podcast Power On<\/em>.<\/p>\n<\/div>\n Earlier this month, Apple hosted its annual iPhone hardware event, virtually every detail of which was reported ahead of time by Mark. But this event was special, for a number of reasons.<\/p>\n<\/div>\n It was new Apple CEO John Ternus\u2019 first major product launch since he took over for former CEO Tim Cook less than two weeks prior. It was also the debut of the iPhone Duo, Apple\u2019s first foldable smartphone. The timing of those two things was not at all coincidental, as you\u2019ll hear Mark explain. Apple takes these hardware events \u2014 and the stories they tell \u2014 extremely seriously.<\/p>\n<\/div>\n This year\u2019s story actually says a great deal about what\u2019s happening at Apple, how Cook managed in wholesale leadership ranks over the past year, and how all of that might change Apple\u2019s culture. Furthermore, what all that tells about Ternus\u2019 plan to navigate Apple from what you might call the iPhone era into the AI era.<\/p>\n<\/div>\n Okay: Bloomberg<\/em>\u2019s Mark Gurman on the future of Apple. Here we go.<\/p>\n<\/div>\n This interview has been lightly edited for length and clarity. <\/em><\/p>\n<\/div>\n Mark Gurman, you\u2019re the chief Apple correspondent and the managing editor of consumer technology at <\/strong>Bloomberg<\/em><\/strong>. Welcome to <\/strong>Decoder<\/em><\/strong>.<\/strong><\/p>\n<\/div>\n Good to be here finally. Thanks for having me. And it\u2019s been a while, so it\u2019s good to catch up on all things Apple.<\/p>\n<\/div>\n Yeah, I\u2019m really excited to talk to you. Obviously, Apple just had its big event. They announced the iPhone Duo. It was John Ternus\u2019s first event as CEO. This is a <\/strong>Decoder<\/em><\/strong> episode, so we\u2019ve got a new CEO, and we\u2019ve got a new org chart inside of Apple.<\/strong><\/p>\n<\/div>\n There\u2019s been a lot of shuffling. You\u2019ve been chronicling them very, very deeply over the past few years. Let\u2019s just start with the event. I have a very basic question for you.<\/strong><\/p>\n<\/div>\n Do you ever get nostalgic for a time when you didn\u2019t know what was going to happen at the iPhone event?<\/strong><\/p>\n<\/div>\n Do you ever wish that you, Mark Gurman, were about to be surprised?<\/strong><\/p>\n<\/div>\n Honestly, I never think about it that way. I\u2019m just fixated on delivering the goods and delivering the news. And people love their Apple. People want to know everything that\u2019s coming down to the last minute, so I\u2019m here to provide it for them.<\/p>\n<\/div>\n The thing with me, and I don\u2019t know if most people know this about me, but I hope people know this about me, is that I\u2019m a huge Apple fan through and through, and I\u2019ve always been. And I\u2019m so lucky to be able to cover a company that I love, a company that I am obsessed with, and a company whose products I use. There are so many people who cover companies that they couldn\u2019t care less about. That\u2019s not me.<\/p>\n<\/div>\n So I do what I do because I love Apple and I love covering Apple. I love the community around it, and I love talking about it. And it\u2019s always fun to get a peek at the future and help keep not only myself informed, but people informed around me.<\/p>\n<\/div>\n That actually leads me to a lot of things because I\u2019ve known you forever. We\u2019ve been working in and around the same spaces forever. You got your start as an Apple blogger at the Apple rumor sites. <\/strong><\/p>\n<\/div>\n There\u2019s a whole culture around Apple that has grown up and changed over the years, and you can trace it to different eras of hardware, to different CEOs, to different sizes of the company. This was the first event with John Ternus as CEO. Apple announced a big new product in the iPhone Duo.<\/strong><\/p>\n<\/div>\n Do you sense that the community is changing? How do you think that community has changed over the years? And do you think Ternus is going to lead to a difference in what that community feels like?<\/strong><\/p>\n<\/div>\n I have to say, this event really didn\u2019t feel much different than a Tim Cook event. They felt pretty interchangeable. It could have been Tim up there introducing it. It could have been Ternus up there introducing it.<\/p>\n<\/div>\n The one thing I will say that did feel slightly different is that Ternus came out swinging with a point of view on AI. The first thing he came out with was about the intelligent personal hub. Now, here\u2019s the big difference between Tim Cook and John Ternus in terms of their management style. You\u2019re inside Apple, you\u2019re an executive, you\u2019ll come to him with an idea, you\u2019ll come to him with a viewpoint, a decision, an opinion, and he\u2019ll just pepper you with more questions. He won\u2019t make a singular decision in many cases. It\u2019s very much communal decision-making, collaborative decision-making.<\/p>\n<\/div>\n John Ternus, if you come to him and you want him to make a decision, he\u2019ll make a decision. He\u2019ll have an opinion. Now, you may hate his opinion; you may completely disagree with him, but he has a viewpoint. But that\u2019s the big difference between talking to people about Ternus and Tim.<\/p>\n<\/div>\n Ternus comes out talking about his view on AI. I may disagree with it. A lot of people may disagree with it. They may think the OpenAI or Anthropic approach is superior, but at least he came out and had a viewpoint.<\/p>\n<\/div>\n Apple\u2019s been at this AI game now for two years since they launched Apple Intelligence at WWDC in 2024, and it\u2019s been a mishmash of things. They haven\u2019t really come out with a very strong narrative and viewpoint, and they finally did. So, as I said, whether you agree with it or not, they did do that. And I thought that was a really interesting way to kick off the keynote.<\/p>\n<\/div>\n All right, we\u2019re just going to get into the weeds of Apple nerds disagreeing about things. <\/strong><\/p>\n<\/div>\n I sat through that event, and I appreciated the same thing that you saw, which is, \u201cOh, we\u2019re telling a story.\u201d John Ternus is on the stage, and the first thing he\u2019s doing is telling a story about this product and how it fits into the universe of technology. And then I took a beat, and I was like, oh, but they\u2019re also just making sure that he\u2019s successful at his first event by playing Apple\u2019s greatest hits. <\/strong><\/p>\n<\/div>\n Because an \u201cintelligent personal hub\u201d is just a replay of Steve Jobs saying the iMac was the digital hub. At the very end of the event, Ternus said, \u201cThere\u2019s one more thing, and it\u2019s the iPhone Duo.\u201d <\/strong><\/p>\n<\/div>\n There was just a part of all of that that, to me, felt like Apple saying, \u201cLook, our new CEO can put on the clothes of the old CEO. He can do this same dance that you\u2019re expecting.\u201d Underneath it, what I felt was, to your point, that I don\u2019t buy the story about the intelligent hub. <\/strong><\/p>\n<\/div>\n No, I don\u2019t buy it either.<\/p>\n<\/div>\n Because any of the things we\u2019re seeing AI do are happening in cloud services. It\u2019s the same week that <\/strong>Meta launched Muse<\/strong><\/a>, right?<\/strong><\/p>\n<\/div>\n You can feel what you want about Meta launching Muse, but Mark Zuckerberg is giving everybody 8GB of storage and 8GB of RAM in the cloud, and Muse can go do a lot of things that AI on the iPhone absolutely cannot do at this point in time. <\/strong><\/p>\n<\/div>\n I just felt like there was a part where they were playing it really safe with John by having him basically show up and be the new lead singer of Journey. You can\u2019t get it wrong if you\u2019re going to do \u201cLights.\u201d If you\u2019re going to show up on stage and do \u201cDon\u2019t Stop Believin\u2019,\u201d you\u2019re going to be fine for a minute. And it\u2019s all the stuff that comes after that\u2019s going to really show his real personality. But it sounds like you thought that that\u2019s his point of view.<\/strong><\/p>\n<\/div>\n Well, it\u2019s a couple of things. At a very high level, Apple\u2019s going to tell a story around what they have. If Apple invented ChatGPT, they would\u2019ve invented ChatGPT, and they would\u2019ve told a good story around that. Apple has gone as far as it\u2019s able to, at least for now, on AI. So it\u2019s telling the story, the best version of that story that they can with what they have to work with, with the bird they have in hand. So that\u2019s the one thing.<\/p>\n<\/div>\n I agree with you on the intelligent personal hub, and how that compares to the iMac back in \u201898. And it feels like they\u2019re trying to sell this pivot from the Mac as the center of everything with the peripherals around it; then you got to iCloud in 2011, the center of everything with the peripherals around it. Now, it\u2019s this Intelligence right at the center with everything around it.<\/p>\n<\/div>\n But what\u2019s so fascinating is that Apple held a major product launch event in September of the year 2026 and did not introduce a single notable new AI feature. The first 15 minutes or so of the keynote was simply a replay, a re-narrativization of what they introduced over the past two years with Apple Intelligence. And so they tried to just tell that story in a more concrete way.<\/p>\n<\/div>\n The other thing is they don\u2019t have any AI devices at the very core, and so they need to prop up the iPhone as their AI device because they don\u2019t have an alternative. But of course they\u2019re only going to do that until they have that killer device, and then they\u2019re going to change that whole narrative.<\/p>\n<\/div>\n So it\u2019s a very narrative PR and marketing-driven company. And I\u2019m not saying that to be critical. I mean, if I ran the company, obviously I\u2019m going to tout what I have. I\u2019m not going to veer from that. But it is interesting how they\u2019re playing this. And I agree, they did play it very safe. There\u2019s nothing safer than John Ternus introducing a new iPhone. It\u2019s like the safest thing you can do. No major new AI product, no smart home hub, nothing in the spatial space, just straight down the middle.<\/p>\n<\/div>\n Yeah, it seems like that next wave of smart home products, which we\u2019re expecting later this year… I say, \u201cWe\u2019re expecting.\u201d I\u2019m expecting it because that is something you have reported.<\/strong><\/p>\n<\/div>\n [Laughs] I am expecting it, yes.<\/p>\n<\/div>\n Mark Gurman is expecting new products from Apple. That is the first cut at some truly AI-native devices. Because you have Siri AI and it is functional now in a way that it previously was not functional, you can try some new classes of devices.<\/strong><\/p>\n<\/div>\n There are about a half dozen AI-native devices coming in the next year and a half or so. The first will be the smart home hub, which is basically an Amazon Echo Show but Apple-style. It will have a square screen and an entirely new operating system. The idea is: what would a Siri AI operating system look like? This is that: intercom, video conferencing, proactive intelligence.<\/p>\n<\/div>\n So you walk up to it, it recognizes who you are, and it will show content personal to you. It will know who is speaking. Obviously, the Amazon Echo can do that, but Apple\u2019s doing it in its own Apple-y way with AI-based Face ID.<\/p>\n<\/div>\n They\u2019re working on a home security system. They\u2019re working on another version of the smart home hub that I just talked about that is attached to a robotic arm. So you put it on your desk, and it can move around. It\u2019s actually a category that\u2019s pretty popping in Asia and in China right now.<\/p>\n<\/div>\n Then you\u2019ve got the wearables, the smart glasses. I still believe those are going to be introduced and shipped in 2027, so not too far from now. Trust me, you\u2019ll be wearing them. Within 365 days, you will be wearing them and have video footage of you wearing them at the Steve Jobs Theater. And if that is not the case, either something went horribly wrong for you or something went horribly wrong for Apple.<\/p>\n<\/div>\n You\u2019ll also have the AirPods with cameras. That\u2019s an interesting thing that we should talk about, but they\u2019ll have the AirPods with cameras and then a few other wearables that I won\u2019t get into.<\/p>\n<\/div>\n So this is what I was talking about when I said there were eras at Apple and people\u2019s relationship with the company really changed. The Steve Jobs era was defined by devices, and in particular, Steve Jobs himself getting up and doing a keynote and <\/strong>famously putting up pictures of all the existing smartphones<\/strong><\/a> and saying, \u201cWell, these all suck. And here\u2019s the reason they all suck, and here\u2019s the iPhone and here\u2019s why it\u2019s better.\u201d <\/strong><\/p>\n<\/div>\n That created one kind of relationship between Apple\u2019s enormous community of fans, its leader, and the products. I think that was very successful. I think the Tim Cook era has been meaningfully different. I think it\u2019s largely a story about scale. To some extent, it\u2019s a story about values. To a huge extent, it\u2019s a story about privacy. <\/strong><\/p>\n<\/div>\n Apple has marketed itself as the privacy company. It <\/strong>fought the FBI to keep the iPhone encrypted<\/strong><\/a>. There\u2019s a lot there with Tim Cook\u2019s version of the company, but it\u2019s more corporate. Certainly, it\u2019s just a vaster company. It\u2019s safer. It\u2019s not as rough around the edges as Jobs\u2019 Apple, but it wasn\u2019t as device-based. <\/strong><\/p>\n<\/div>\n I don\u2019t think the Vision Pro has the same kind of mainstream cultural impact as even the hockey puck mouse that Jobs put out. There was a thing that he could do with products that Tim Cook Apple could not quite do with products. And that just feels really different to me.<\/strong><\/p>\n<\/div>\n I\u2019m going to correct you on that because every time I put an article or a post out about the Vision Pro being on life support, I get what amounts to basically a notch or two below a death threat from dozens of people. So people are passionate about it.<\/p>\n<\/div>\n Well, honestly, I think what it is is that people have created businesses around spatial computing and apps, and they\u2019re just pissed off that they\u2019ve invested all this time and money in a category that\u2019s probably going to die out.<\/p>\n<\/div>\n And then you have consumers who spent four grand on this product, and they\u2019re like, \u201cI saved up for this thing, I\u2019m living with this thing, and I\u2019m pissed off to hear the realities.\u201d But if you have another hour, we can talk about the Vision Pro.<\/p>\n<\/div>\n No, the comparison there is good. People have invested in it. They care deeply about it. The comparison I\u2019m making is that the relationship people have to Apple in the Cook era is as an institution. It\u2019s just like this big thing that spans the globe on a massive scale. <\/strong><\/p>\n<\/div>\n Yeah, and in the Jobs era, it was all about really, really innovative new products that redefined categories over and over again. You\u2019re describing a whole bunch of new products that came up in the Cook era that John Ternus is going to launch. How do you expect the culture of Apple to change around its products or its relationship to the culture to change as we go from one CEO to another?<\/strong><\/p>\n<\/div>\n But think about what they did. You\u2019ve got the coolest new iPhone and Apple product in maybe 10, 20 years introduced one week after Tim Cook steps down. And then for the next 12 to 18 months, you\u2019ve got, I don\u2019t know, six or seven new product categories. Maybe you have 25 pretty breakthrough things.<\/p>\n<\/div>\n So Tim Cook made a decision that, even though his tenure at a product company was pretty limited in major new things, the Apple Watch turned out to be a success, even though it started as a complete dud, as you remember. The AirPods are a unique beast in that they\u2019re an accessory, but it\u2019s not a platform on its own yet. It\u2019s going to get there. And the Vision Pro is a failure.<\/p>\n<\/div>\n Tim Cook could have ended his tenure as CEO with the iPhone Duo. He could have just waited. Typical transitions at Apple happen mid-October or mid-April; they happen on January 1st. It was a specific decision that was made for John Ternus to be the one to introduce the iPhone Duo. It was a specific decision made for John Ternus to be the one to introduce this whole new product roadmap. Even though, as you know, because of the length of hardware development cycles and R&D, these things were in the oven for five to 10 years.<\/p>\n<\/div>\n So it\u2019s really interesting that this decision was made to let Ternus be the face of this whole new era of products rather than allow Tim Cook to take the credit for it. And I think that\u2019s to your point where they\u2019re trying to draw the line in the sand of this new era. If Cook is already going to step down in the next three years, let\u2019s just do it now and let Ternus take the credit for everything.<\/p>\n<\/div>\n Take me inside that. You\u2019ve obviously done a lot of reporting. I think you were the first to break the news that Cook would be searching for a successor. You were, I think, among the very first to break that it would be Ternus. Tell me about that process. <\/strong><\/p>\n<\/div>\n This is a big decision; Cook is going to play a huge role at the company. He has a massive compensation program tied pretty much to having to talk to Xi Jinping and Donald Trump. It seems like that\u2019s his job: to just manage that relationship. <\/strong><\/p>\n<\/div>\n For $47 million a year, I would talk to Trump and Xi Jinping on the phone every day.<\/p>\n<\/div>\n [Laughs] I would need at least 50, but that\u2019s just me. That\u2019s his job: to go do politics much the same way that Eric Schmidt at Google was in charge of governments after Larry Page became CEO. There\u2019s a whole pattern here. <\/strong><\/p>\n<\/div>\n Brad Smith at Microsoft, even though he wasn\u2019t CEO, but yeah.<\/p>\n<\/div>\n He\u2019s the president of the company. Yeah, there\u2019s a parallel here. Tell me about this decision of Tim Cook wanting to elevate his position to something like that, and of making John Ternus the face of the product side of the company in this new role.<\/strong><\/p>\n<\/div>\n So 2023 rolls around and Tim Cook starts every executive team meeting, all high-level meetings with people at Apple at the executive levels, with, \u201cWe need to start taking succession seriously. We need to start thinking about who the next people are.\u201d At that time, there was a really strong realization that many of the people at the top of Apple either had half a billion dollars in the bank or were already billionaires, and that this era would start to age out really quickly.<\/p>\n<\/div>\n And so Tim Cook knew that he wanted to take a step back. Jeff Williams, the number two as the COO, knew he wanted to retire. The CFO, Luca Maestri, wanted to retire, too. The general counsel, Kate Adams, also wanted to retire. They were all about the same age, give or take a few years. So they basically came up with this plan that would go one by one over the next few years.<\/p>\n<\/div>\n It started with the CFO. Luca retires at the very end of 2024, and he\u2019s replaced by the new CFO, Kevan Parekh. Then 2025 rolls around, and Jeff Williams, the COO, retires and is replaced by his deputy, Sabih Khan. Then in 2026, they had the transition for the general counsel, and they got a great replacement for her from Meta, Jennifer Newstead. And then at the end of 2026, the big one: Tim Cook to John Ternus. So they played this out very, very slowly.<\/p>\n<\/div>\n What Tim Cook has done, and I do think this is going to change in the Ternus era as we progress here, is that he came up with this strategy that I call \u201cHotel California.\u201d You never want to leave. Tim Cook, he\u2019s staying around as executive chairman. The general counsel had her stay around an extra six to nine months to run government affairs. Jeff Williams stayed around three to four months after stepping down as COO to just oversee the design team, the watch team, and the health teams as part of a transition.<\/p>\n<\/div>\n For CFO Luca Maestri, the vast majority of his responsibilities went to his successor, but he kept three things. He kept oversight of information systems and technology. It\u2019s basically like your IT department, corporate information security \u2014 which is security for the organization \u2014 and corporate real estate, so campuses, retail stores, facilities, and whatnot. It was kind of a BS job, I\u2019ll be honest with you.<\/p>\n<\/div>\n It was more so keeping him on the payroll and keeping him around in case things hit the fan, they had a financial issue, and they needed the adult or the grandfather in the room to take the bull by the horns and fix things as they transitioned to the new guy. But now Luca, he\u2019s still there, still getting paid, and he\u2019s teaching a class once a week at Apple University. So he\u2019s a professor there now. I\u2019m not sure how much longer that\u2019s going to run for, but he\u2019s still there.<\/p>\n<\/div>\n All these old-school Apple guys are either retired or semi-retired or a notch between semi-retirement and retirement. And then we have Phil Schiller. The same week that Ternus took over as CEO, I reported<\/a> that Schiller is leaving his remaining responsibilities of running the App Store and running Apple Events, and he\u2019s at Apple now for the next little while working on special projects. They\u2019re not saying what that is, but he\u2019s there, reporting to Ternus, and still on the Apple leadership website. He\u2019s around if needed in sort of an advisory capacity, and we\u2019ll see how long that lasts.<\/p>\n<\/div>\n But really this is just a gigantic end-to-end change of the guard at Apple. It\u2019s the biggest executive overhaul I\u2019ve certainly seen in my career reporting on Apple. Don\u2019t forget, when Tim Cook took over for Steve Jobs, there was no overhaul. Many of the guys under Cook were the same guys under Jobs. So a lot of them have been there for a while.<\/p>\n<\/div>\n This is definitely a new era, a new generation, and you\u2019re going to see more changes. The head of marketing, the head of retail, some of the other people, they\u2019re in their mid-60s, almost. They\u2019ve got hundreds of millions of dollars. They can\u2019t do this forever. They\u2019re talking internally about retirement. So you\u2019re going to see another wave of changes in the next few years as well, I believe.<\/p>\n<\/div>\n You mentioned Phil Schiller, who I\u2019ve known for ages at Apple because I\u2019m old. He\u2019s transitioning out of his role running the App Store. And you had a piece of reporting that suggests part of it is because John Ternus and Eddy Cue want to extract even more money from developers. They want to keep that Apple tax high. They want to find more ways to have services revenue, and Schiller wasn\u2019t interested in that. <\/strong><\/p>\n<\/div>\n Schiller has famously always thought that Apple was squeezing its developers too much. There\u2019s reporting; there are emails from some of these lawsuits. What\u2019s going on there?<\/strong><\/p>\n<\/div>\n Yeah, it\u2019s very interesting. I mean, obviously one part of it is that Schiller is 66. He wants to spend more time with his family, but for real, when it comes to him, he wants to do more philanthropy. He\u2019s been involved in all sorts of stuff in that regard. But at the same time, this is a new era for Apple. Eddy Cue has a firm grip over all Apple services now, really for the first time in a while.<\/p>\n<\/div>\n John Ternus is very close with Eddy Cue, and they are looking at new ways to make more money on the App Store, whether that\u2019s additional advertising slots or additional subscription opportunities. Obviously, there\u2019s going to be a reinvention of the App Store coming in the next few years to make more use of AI and to fill in to Siri AI as well.<\/p>\n<\/div>\n Phil Schiller, according to my reporting, believes regulators are still hot on Apple\u2019s trail. Developers are still unhappy with Apple. As they go into this new generation, he wants to distance a little bit from it, but he still loves Apple more than anything, and he\u2019s still part of Apple for the foreseeable future.<\/p>\n<\/div>\n To be clear, there was no big blow-up or anything between him, Eddy Cue, and Ternus or anything like that. It just, with all these considerations, felt like a natural time for him to step off. And he\u2019s also stepping away from Apple events, right?<\/p>\n<\/div>\n So it\u2019s not just dropping the App Store; it\u2019s dropping his two remaining responsibilities, which was a lot, right? He was part of the Hotel California crew, but he had the most responsibility between the App Store and Apple Events. Those are big things.<\/p>\n<\/div>\n Yeah, and worth noting, he\u2019s not wrong about the regulators. There\u2019s still an outstanding Department of Justice antitrust case against Apple regarding the App Store, CarPlay, and all this other stuff that was started under the Biden administration and <\/strong>has not gone away in the Trump administration.<\/strong><\/a><\/p>\n<\/div>\n First of all, it\u2019s surprising that it hasn\u2019t gone away under the Trump administration, given the alliance between Donald Trump and Tim Cook. That has always been shocking to me. I thought that was going to get blown up a year ago.<\/p>\n<\/div>\n And then the other thing is nobody knows any of this more than Schiller because he\u2019s the one at the center of every meeting. He\u2019s the one doing the depositions. He\u2019s the one on the stand. So if anyone has the pulse of these governments and the pulse of developers, it\u2019s him.<\/p>\n<\/div>\n The big <\/strong>Decoder<\/em><\/strong> trope is that the structure of a company is connected directly to its culture. If you tell me how your company is roughly organized, I can tell you where about 80 percent of your problems are and where the other 20 percent of the magic is. <\/strong><\/p>\n<\/div>\n Every now and again, I get pushback on this from a CEO who says, \u201cNo, no, it doesn\u2019t matter. It\u2019s all about the people.\u201d I feel like Apple is both, right? The structure of Apple has been the same for a long time. Steve Jobs used to call it the world\u2019s biggest startup. And then you just had these people who had been there forever. They\u2019re just the same cast of characters under Cook as they were under Jobs. <\/strong><\/p>\n<\/div>\n You could probably shuffle them any way you wanted, but it was the same people, and so, of course, the culture persisted. You\u2019re describing a wholesale turnover at the top. And then it also seems like there are some structural changes happening underneath John Ternus, right? Jony Ive was the chief design officer of the company, which always felt to me like part of that Hotel California strategy. <\/strong><\/p>\n<\/div>\n Oh, that was its own… That was like Hotel Cupertino. I mean, that was its own level.<\/p>\n<\/div>\n But they were afraid of him leaving because he was so tied to the Jobs era, and then they managed to work him out of the company. We can talk about OpenAI in a bit. But Johny Srouji is the chief hardware officer now. That\u2019s not a title Apple has ever had before. That also feels like potentially a transitional title.<\/strong><\/p>\n<\/div>\n Can we talk about that? Can we talk about Srouji for a minute?<\/p>\n<\/div>\n Right now, Srouji is the second most important person at Apple. He created Apple Silicon. And let\u2019s just face it: you cover the whole industry, I cover the whole industry; that\u2019s their key differentiator. That\u2019s what allows them to do different stuff. That\u2019s their competitive advantage. Letting this guy walk out the door would\u2019ve been a nightmare scenario, especially right now.<\/p>\n<\/div>\n Last fall, really late summer to early fall, he goes to Tim Cook and tells him he\u2019s done. This is right when planning for Ternus taking over is kicking into high gear. Tim says, \u201cI need you to stick around as part of the transition. We can\u2019t have you go elsewhere. We can\u2019t have you go to Nvidia,\u201d or wherever he was thinking about going. Certainly not retiring. This guy\u2019s not ready to retire, I don\u2019t think.<\/p>\n<\/div>\n So Tim says, \u201cHere\u2019s what we\u2019ll do. When Ternus becomes CEO, we\u2019ll make you chief hardware officer. So you\u2019re going to keep your existing team, and then you\u2019re going to get all the Ternus stuff, and then you\u2019ll undoubtedly be the second most important person at Apple.\u201d Srouji agrees, takes a new pay package, I\u2019m sure, and now is in that chief hardware officer role.<\/p>\n<\/div>\n I do not believe that is a long-term thing. I think that he\u2019s already back to wanting to transition to something new, to transition out of Apple. He really has not a lot left to do. He conquered the Mac; he dumped Intel; he dumped Qualcomm. What\u2019s left? This is a guy who wants new challenges and new things, and he\u2019s done it all at Apple, and there\u2019s no next thing to go after. They\u2019ve really done it all.<\/p>\n<\/div>\n So it\u2019ll be interesting to see how quickly that happens, I think in a year or two. And then when that happens, this recombination of the hardware engineering teams into one group, they\u2019re going to have to break that up again because there\u2019s no successor to Srouji who has that industry clout and that leadership capability to be a singular hardware figurehead at the company.<\/p>\n<\/div>\n Yeah, if you have managed to <\/strong>acquire Intel\u2019s disastrous modem business<\/strong><\/a> and fix it, what worlds left are there to conquer?<\/strong><\/p>\n<\/div>\n It was the hardest thing you could have possibly wanted to do, and he did it. Those modems are shipping in the new phones.<\/strong><\/p>\n<\/div>\n And no complaints, right? If I were to place a bet with you two years ago, how is this Apple modem thing going to go? I would\u2019ve guessed it was going to be a disaster.<\/p>\n<\/div>\n Well, they did have to slow down the Qualcomm modems to make their modems look competitive.<\/strong><\/p>\n<\/div>\n There is certain stuff in there for sure.<\/strong><\/p>\n<\/div>\n Fine. But I\u2019m talking about articles, about people\u2019s calls dropping, not being able to load webpages and whatnot. All things considered, pretty seamless.<\/p>\n<\/div>\n True. So this is the question that I\u2019m really getting at: we\u2019re talking about a lot of new people and, inside of it, a return to form in terms of just what that leadership page looks like. There\u2019s no chief design officer who\u2019s a legend in his own right. You\u2019re saying soon there won\u2019t be a chief hardware officer who\u2019s a legend in his own right. <\/strong><\/p>\n<\/div>\n Of the heads of design listed on that page, Alan Dye left and went to Meta. Now they\u2019re just vice presidents again. They\u2019re not even SVPs of design, but they report to John Ternus. We\u2019re headed back towards a more functional Apple. They\u2019ve gotten to some kind of divisional structure as they try to keep all these powerful people. What do you think that\u2019s going to do to the company, or is that just going to be more of the same?<\/strong><\/p>\n<\/div>\n It\u2019s so interesting. You look at the number of things and the amount of stuff that each of these reports that John Ternus has; it\u2019s a lot. I also think you have a problem where there are vice presidents, so a tier below the SVPs, who want to grow, but you have these senior VPs who are going to be there forever, like Eddy Cue.<\/p>\n<\/div>\n He\u2019s been there for almost four decades. And you\u2019ve had people under Eddy Cue who\u2019ve left for newer jobs and big things outside of the company because they wanted to replace Eddy internally, but they know that he\u2019s never leaving. They knew that he was going to stick around for a long time. So you\u2019re losing good people at the VP level.<\/p>\n<\/div>\n I think, eventually, you\u2019re going to see an additional layer. I think you\u2019re going to see this chief hardware officer idea become some new thing they\u2019re going to try. For example, could they make Craig Federighi, who runs software, like chief software and AI officer or something at one point, and then elevate some of the people under him to that senior VP level, give them more responsibility, give them more money to keep more people around?<\/p>\n<\/div>\n So I think that leadership structure is going to be in flux for a while until they figure out how to do this. I mean, the old, old Apple, they had VPs, they had senior VPs, they had executive VPs. You can imagine they\u2019re going to play with these things in order to keep people, because I think one of their biggest problems, other than AI at this point, is retention of key players.<\/p>\n<\/div>\n I actually would draw the connection between retention and AI. Not having that bench of younger people with new ideas or disruptive ideas, I think, prevented them from seeing AI for what it was.<\/strong><\/p>\n<\/div>\n That\u2019s a really good point.<\/p>\n<\/div>\n I think about what came to be known as the <\/strong>Cook Doctrine<\/strong><\/a>, where Tim Cook would often say, \u201cWe want to own and control every foundational technology that goes into our phones.\u201d This is really just a statement of Apple\u2019s own paranoia about being chained to Intel for a long time or whatever it might be. They couldn\u2019t see a way to own and control AI because it\u2019s just a massive investment. They had just blown a bunch of money trying to make a car, and they kind of missed it. <\/strong><\/p>\n<\/div>\n They don\u2019t have a model of their own that competes at the frontier. And so Apple <\/strong>distilled Google\u2019s model<\/strong><\/a>, and this feels like a pretty big jump away from the Cook doctrine. Do you think they\u2019re going to have to compete in AI by making their own investments on the frontier, or do you think they\u2019re happy where they are?<\/strong><\/p>\n<\/div>\n It\u2019s one of the craziest things that I\u2019ve ever heard \u2014 Craig and these other executives in these interviews over the last year saying that, \u201cWe never owned search. We don\u2019t need to own AI.\u201d First of all, two completely different things. Second of all, to your point, they have spent so many tens of billions, hundreds of billions, talking their mouths off about owning something as simple as a cellular modem. When I say simple, I mean something as commoditized as a cellular modem, spending billions to buy and then try to fix the Intel modem business.<\/p>\n<\/div>\n So you\u2019re willing to do that, to own something like a modem, but you\u2019re not willing to own AI. It\u2019s ridiculous. And they know that; that\u2019s why they tried to own their AI and build it from the ground up. They ran into a wall, and they had no choice but to partner with Google on fixing up their models.<\/p>\n<\/div>\n The idea internally has always been \u201cwe are going to work with Google as a stopgap solution until we\u2019re able to do our own models from the ground up.\u201d Let\u2019s put that aside. At the same time, I\u2019ve seen absolutely zero evidence that they\u2019re actually working on that plan A again. I\u2019ve seen no evidence that they\u2019re hard at work on building fresh Apple-made models from the ground up.<\/p>\n<\/div>\n I\u2019ve seen no evidence that they\u2019re running around to make big AI acquisitions. I\u2019ve seen no evidence that they want to start throwing huge pay packages at AI researchers for Meta, Google, Anthropic, or OpenAI. So right now it feels like we are at a standstill. It feels like they want to see how this Google deal and how working with third parties goes for the next several months, and then they\u2019ll make a decision if they want to go back to sort of building and competing with the other guys.<\/p>\n<\/div>\n I think they want to see how things play out. I think they want to see the Anthropic and OpenAI IPOs. I think now, with all the news about AI safety, they want to see how this all plays out, and maybe they\u2019ll make a decision in six months about where they want to go. But as of right now, I\u2019ve seen no evidence that the transition of moving back to in-house stuff is happening.<\/p>\n<\/div>\n To be fair, it\u2019s an advantage that there\u2019s no chance that Siri will kill us all. It simply is not capable enough to do it.<\/strong><\/p>\n<\/div>\n Again, Nilay, they fell backwards into that. It was not a strategy. Apple\u2019s current AI product was not the result of good work, right? It was the ultimate failing upwards.<\/p>\n<\/div>\n Let me ask you about that, because right next to that, I mentioned Jony Ive; he\u2019s obviously working with Sam Altman. They\u2019re going to <\/strong>build some set of products<\/strong><\/a> at OpenAI. A lot of Apple designers have gone over to OpenAI.<\/strong><\/p>\n<\/div>\n