Apple’s New CEO

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2:01The current chief executive Tim Cook will step aside in September, and longtime Apple executive John Turnus will succeed him. Cook is sticking around. He'll become Apple's executive chairman because, as he told ABC's Good Morning America, I can't imagine life without Apple. During Cook's tenure, Apple's market value soared by more than$3.6 trillion. It sold its billionth iPhone, reached 540 stores worldwide, and it celebrated its 50th anniversary. Those are big milestones, sure. But what we haven't seen are real breakthrough new types of products under Cook. That's Bloomberg's Mark Gurman, who's covered Apple for years.

2:45I think there was a recognition that Apple is at an inflection point in its history, where you're seeing open AI, Meta, and other companies cropping up with new types of devices. And Mark says the careful CEO succession plan is an indication Apple sees just how much is at stake. You know, when Steve Jobs picked Tim Cook, the idea was that they had this product roadmap. They needed someone to execute the ideas, broaden manufacturing, bring the iPhone into China, release new types of variations of existing products. What they need now is someone who can lead Apple into a new era with entirely new types of products.

3:23And so they're betting on who else but their hardware engineering person, the youngest person on the executive team, to take the company into the new era. Tim Cook is always going to do what's best for Apple. And really, what's best for Apple at this point is for Tim Cook to no longer be CEO. So I think Tim Cook is doing right by Apple by passing off the baton right now.

3:50I'm David Gura, and this is The Big Take from Bloomberg News. Today on the show, a new era for Apple.

4:00Mark, walk us through John Turnus' resume at Apple. He worked on their product design team. He worked on cinema displays early on. Then he worked on a bunch of Macs. He worked on the iMac G5. He worked on some Mac notebooks and what have you. And then he was selected to be part of the leadership building the original iPad. And what Ternus made his name on was product durability. If you ever held the original iPad, I think the thing that people remember was how durable it felt, how good it felt in the hand. And it felt like this strong piece of equipment. After the original iPad, Ternus was put in charge of development for the Mac and spearheaded the creation of AirPods.

4:43He was seen as someone who had a real gift for coming up with new products and product designs for Apple. And then his final test was actually at the turn of the decade. Going into 2020, Dan Riccio, his boss at the time who ran hardware engineering, he shifted engineering of the iPhone to Ternus. Could he bring a major new iPhone to market? And very successfully, they were able to bring the iPhone 12. That was at the height of COVID and only launched it about a month, a month and a half later than their usual cadence. What Ternus was able to bring to market was a major new redesigned iPhone, the first iPhones with 5G, which kickstarted a new super cycle of launches for the company.

5:23Mark says it was that success during the pandemic that set up Ternus to succeed Tim Cook. 2021, Ternus officially becomes head of hardware engineering for Apple and served on Tim Cook's executive team for the last five, six years in that position. What do we know about who actually picked Ternus? Was this the board's decision? Tim Cook, he made the selection. He made the choice. And my strong belief is that Eddie Q, the head of services at Apple, who had worked very closely under Steve Jobs, was Tim Cook's perhaps chief advisor on the selection here. Apple doesn't do CEO transitions too often.

6:03And it's fair to say this is the first sort of well-executed CEO transition in Apple's history. Obviously, the Tim Cook era began because Steve Jobs, the company co-founder, was about to pass away. And that was very sad. And Cook was pushed into this role. But now we're getting a formal transition here where a successor is being handpicked and is going to ease into the role over the next three to six months or so. And so I would say this was a choice made between Tim Cook, Eddie Q, and Apple's board of directors. But ultimately, Apple's board is going to go with what Tim says. He's now the exec chairman, and they voted unanimously to select John Ternus as the CEO.

6:45What does that background, that emphasis on hardware, say about the way he's likely to approach the big job at Apple? The role of the Apple CEO is to take what they're best at and apply that knowledge to those specific areas at the company. When you're the CEO of such a gigantic company, and Tim Cook, he has about 20 direct reports. The way Apple is organized is that all the major functions report up to the CEO directly. And so you have to pick your spots. You can't really get your hands dirty with every function. Tim Cook, a finance guy, a sales guy, an operations guy. So he put his fingers in all that and had been deeply involved in the operations, the supply chain, the manufacturing of the company.

7:23What you're going to see with Ternus is he's going to leave the operational stuff, manufacturing, supply chain, you name it, to the other leaders at Apple who are in charge of those functions. They have a new COO. They have a new CFO. They have a new procurement person. They have a salesperson who's been elevated in the company in recent years. But you're going to see him apply his attention to the product design teams, the hardware engineering teams, the silicon teams, probably the software teams, and really get knee-deep in the product development side of things. And I also expect him to have a very strong influence and involvement on Apple's AI work, not only in how the company is run, but AI products as well.

8:07Ahead of the CEO announcement, Mark noticed Ternus got a marquee role at a major Apple event last month. We are so excited to have you all here so you can get your hands on all the new products we've announced this week. He kicked off the event, which was usually what Tim Cook did. And it's not just a big deal that he, rather than other Apple executives, took center stage, but it was the kind of product that he rolled out next. one that, according to Mark, has the potential to disrupt the lower end of the laptop market. ... totally new, from the ground up, a new system to do just that. And we call it MacBook Neo.

8:44The MacBook Neo, an Apple laptop for$599, almost half as much as the MacBook Air. Ternus' big push with the MacBook Neo was this idea that they need something fun, cheap and cool for students, for kids, for people who don't want to spend$1 ,100 plus on a Mac computer in order to bring more people into the Apple ecosystem. The thought is if you get a MacBook Neo at an early age, you'll become an Apple customer for life. Get the phone, get the iPad, get the AirPods, get the watch, you name it. They needed some sort of gateway entry-level product into the Apple ecosystem. And they knew that for students, an iPad in many cases wasn't going to cut it because the effectiveness of a Mac is so much better.

9:27For years, Apple's marketing people, they really pushed back against the idea of what they called chasing market share with cheaper products. And so Ternus really pushed for this. And as Eddie Q, Apple's services chief, said in a town hall meeting with employees after the CEO introduction, he said it's the hottest product in the world right now. But it is indicative of Ternus being able to fight for something, push through something, and make a meaningful change when it comes to a product at the company. The truth of the matter is, is that they've been preparing for 2027, 2028 to be this big product moment for the last several years.

10:04Ternus is externally not talking about the plan, but I can tell you that Ternus has been leading the charge on six major new products that are all new product categories for Apple. Compared to these six products planned for the next two years under Turnus, Mark says Apple only launched three new product categories during Cook's 15 years as CEO. So what do these six products have in common? AI, AI, AI, AI, AI, AI. So the first one we'll see is a product that is a smart display. This is a HomePod with a screen. It's a mini-sized iPad that you can put on your wall or put on a speaker base. and it has facial recognition.

10:44It could play nicely with the new Siri and be a home hub command center for everything you want to do in your home. The second product is a tabletop robot. It's that same device I just explained, but with a robotic arm. So you put it on your desk, your kitchen counter, and then that display can move around in air, in space with a robotic actuator, sort of like an artificial limb. And then the third product is going to be a privacy-focused security camera and home security system. The other three products are going to be AI wearables. You're going to see new AI AirPods with AI features. You're going to see smart glasses and you're going to see a pendant.

11:25They have computer vision cameras so they can feed data into the Apple Cloud and into your iPhone with AI processing to do things like visual reminders or visual turn by turn directions. You could be wearing the AirPods or the smart glasses. And when you're walking down the street with maps going and instead of it telling you turn right in a thousand feet, it'll say turn right by the gray building with a bunch of windows on the outside. Mark says Apple also has plans for new features and updates in existing product categories like a new 20th anniversary iPhone with curved glass and touchscreen MacBooks, assuming all goes to plan.

11:58But of all the potential products that Mark is anticipating the incoming CEO to release first. John Ternus is going to become CEO the first week of September. And then a week later, he's going to introduce the biggest new Apple product in several years, the foldable iPhone. Why is a foldable iPhone such a big deal? First of all, I think a foldable iPhone is freaking cool, me personally, and I can't wait. And it's a game changer. You know, the big difference with this foldable phone is that Apple has really upped the quality in three key ways. One is durability. Foldable phones are known for being really flimsy and breaking easily.

12:35And Ternus is known for someone that wants to apply very high product quality reliability so people can get really long-term use out of these things. But it's really an engineering marvel, a technical marvel, and they're going to get into the nitty-gritty about why this is so complex and, like, you know, the new CEO is the guy who spearheaded it. Not everyone's going to want to buy it or be able to afford it, but I'll be first in line.

12:58Up next, what does the leadership change at Apple mean for the company's relationship with President Trump?

13:08We buy insurance for peace of mind, but every year millions of claims are denied. Not because people did anything wrong, but because their policies quietly excluded what happened. Insurers know every detail. Policyholders rarely do. That's why My Policy Advocate exists. For just 27 cents a day, their platform reads your policies and explains where you are vulnerable. They don't sell insurance, they deliver transparency. Before you trust your policy to protect you, let My Policy Advocate tell you what it really says. Go to MyPolicyAdvocate.com. There's no denying it. Moms make the world go round.

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15:17Tim Cook, who has been the CEO of Apple for 15 years and has worked at the company for 28 years, is staying on as Apple's executive chairman. I asked Bloomberg's Mark Gurman how Cook is going to approach that new role. What he said is there's one CEO at a time. He's not getting in the way of Ternus. He said he is going to be there for whatever he's called upon by Ternus and to serve as a sounding board and as an advisor to him. The other thing he said is that he'll be very focused on policy. Reading between the lines, he's very focused on the next three years of Donald Trump's term, dealing with him.

15:53Very focused on dealing with China. Very focused on world stage related matters. How are you thinking about Tim Cook's legacy as CEO amidst all this? Tim Cook's legacy is that he took over for a generational once in a lifetime technology company co-founder and leader. And when he took over for Steve Jobs, I mean, if you remember, it was pretty tumultuous and uncertain at the time. You know, things could have gone either way. But he kept that ship steady. He executed the vision of Steve Jobs. He brought new products to market, and he squeezed so much lemonade out of the lemons that was Apple at the time to make variations of products, growing the financials of the company to such an incredible, mind-boggling, eye-melting degree, taking Apple into services really in a big way for the first time, Apple TV, Apple Music, health products, financial services.

16:48The other thing he did was that China mobile deal, getting the iPhone into China in a big way in the early 2010s. So his legacy is nothing short of incredible. I think it could have been even better if there were a few product related things that worked out. He's leaving Apple with an AI legacy so far that is negligible and very unfortunate for them. The other thing was a mishandling of the self-driving car project, where Apple spent a decade and tens of billions of dollars working on that self-driving car. Obviously, the hard calls to cancel that project were made. But quite frankly, with Apple's resources and ideas and manufacturing capabilities, they should have been able to bring something to market, and they simply didn't.

17:34I think about the challenges this company faces, and you've alluded to a few of them, certainly lagging in the AI race. You've written about this exodus of top talent from Apple to competitors and other companies, particularly in the AI space. How well equipped is John Ternus to right the ship when it comes to those issues and others? I think Ternus is definitely equipped. I think that one of the biggest issues Apple's facing right now are some of these AI companies wanting to build hardware, basically pillaging the hardware ranks of Apple. And I think putting a hardware engineering person at the top of Apple, who's going to leave Apple right now in the middle of this from your hardware engineering standpoint when now you have hardware engineering running the company versus sort of what people have called the bean counters?

18:17Tim Cook's been the job for 15 years. Let's assume that John Ternus has a similar tenure, 15-year tenure. Well, if he doesn't, then this was all a failure. The whole idea was that Ternus could walk in for 15 years. Play it out for me. What does this company look like 15 years from now if John Ternus has a successful run as CEO? Well, 15 years from now, if he had a successful run as CEO, they would invent new types of product categories that we haven't seen from other companies. Maybe he brings the car project or some sort of mobility project back to fruition. maybe he's able to get Apple into the humanoid space, helping lead the charge to move away from manufacturing all their silicon, essentially in Taiwan, and move it to the US and elsewhere at a faster pace, you know, at least doubling or tripling the size of the Apple ecosystem in the user base, just like Tim Cook was able to do, make this a perhaps if you look at inflation and everything, like this should be a$10 trillion company by the time, you know, all is said and done.

19:15But most of Well, most important thing is retaining the Apple brand, keeping and growing Apple as the strongest technology brand in America, and not losing steam to newcomers like OpenAI and Meta.

19:34This is The Big Take from Bloomberg News. I'm David Gura. The show is hosted by me, Sarah Holder, and Juan Ha. The show is made by Aaron Edwards, David Fox, Jeff Grokot, Eleanor Harrison Dengate, Patty Hirsch, Rachel Lewis-Kriskie, Katie McMurrin, Naomi Ng, Julia Press, Tracy Samuelson, Naomi Shaven, Alex Segura, Julia Weaver, Yang Yang, and Taka Yasuzawa. There's much more on Bloomberg.com. Get unlimited access to all of our coverage at a special rate for listeners at Bloomberg.com slash podcast offer. Thanks for listening. The Big Take. We'll be back tomorrow.

20:13We buy insurance for peace of mind, but every year millions of claims are denied. Not because people did anything wrong, but because their policies quietly excluded what happened. Insurers know every detail. Policyholders rarely do. That's why My Policy Advocate exists. For just 27 cents a day, their platform reads your policies and explains where you are vulnerable. They don't sell insurance, they deliver transparency. Before you trust your policy to protect you, let My Policy Advocate tell you what it really says. Go to MyPolicyAdvocate.com. There's no denying it. Moms make the world go round.

20:48Celebrate mom with a gift that really pops. A personalized Funko Pop, where you'll select hair, clothing, and skin tone options to match her go-to look. Don't forget to show off her special talents, hobbies, and interests with accessories to match. You can even add her favorite furry friend. Show mom the love this year. Start creating now at Funko.com. Be unique, not anyone else. Express it now, just pop yourself. That's Funko.com. American soccer is about to explode. The World Cup is coming. Ramos sending on Ernie Stewart, the chip, scores! I'm Tab Ramos. I'm Tom Boak. On our podcast, Inside American Soccer, you'll get the real storylines, the biggest decisions, and the truth about the U.S.

21:36national team. It wouldn't be a huge surprise if our team ends up in the quarterfinals or potentially a great run into the semifinals. Listen to Inside American Soccer with Tom Bogart and Tab Ramos on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.