Apple's Heir Apparent Steps Into the Spotlight

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1:32Carol Massar:Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenevek on Bloomberg Radio. One of the largest market cap companies in the world. Okay. It's about to celebrate its 50th anniversary on April Fool's Day. Okay, and yet? And yet, one of the big questions hanging over it, Tim, is who will take over the reins next?

2:15It's something that the current CEO doesn't really like to talk about yet. It is today's Bloomberg Big Take. And Mark Gurman highlights Apple's nice guy-era parent. For more, let's head to Bloomberg News' LA Bureau into Bloomberg News Managing Editor for Global Consumer Tech, Mark German.

2:29Carol Massar:We like big build-ups to you. We're just going to tell you. We just like to do that. John Ternus, it's not a name that a lot of people outside of the immediate Apple ecosystem were super familiar with a couple of years ago, but he's been at Apple for 25 years. Why is he in the position, in your view, to be the heir apparent to Tim Cook? There are a few main reasons. One, and this is an interesting one, he's 50 years old, which makes him 15 years younger than Tim Cook and at least 10 years younger than the rest of Apple's executive team, people who would be in position to take the CEO role. Tim Cook is not going anywhere imminently, right?

3:07I still think it's going to be at least another year to go before he's no longer CEO, maybe two to five years. Who knows at this point, right? I mean, everything in his world is Apple, so it's a hard position to move on from. And that means that the rest of the executives who could take over are going to be even older, right? And so you need someone in the role who could take over and be in that position for 10 to 20 years. And that really leaves you only with John Ternus. Aside from that, he's the only person on the executive team who has successfully launched hardware, software, integrated products.

3:45He is essentially in charge of their products, which generate 80 % of revenue for the company. He's known for his political acumen. He's known for empowering leaders under him at Apple. He's known for getting into the weeds on the technical side. He would be a different type of CEO for Apple, right? Steve Jobs was an innovator, a designer, a product genius, really a visionary. Tim Cook was a visionary when it came to operations and sales and finances. And Ternus, in his own right, is a maestro of engineering, solving hard problems, bringing devices to market, drumming up new products. So that's going to be a different type of CEO, but I still think it would be a continuity pick in the sense that he's worked under Tim for a very long time, well north of a decade.

4:39He's been a senior VP at Apple for about five years at this point, and he's someone Apple has been pushing to the forefront in its marketing, in its keynotes, meetings with government regulators, meetings with press local in different jurisdictions around the world, different Apple campuses and offices globally. So this is someone who's at the forefront of the CEO race at Apple right now.

5:04Carol Massar:You know, Mark, so much here at Bloomberg, what we'll talk about when we're going through a different economic or market cycle is that, you know, when it comes to like a Fed chair, we need like the right Fed chairman for the era. Like I think about during the great financial crisis during COVID and just so on and so forth, or go all the way back to Volcker when we were dealing with inflation. What is it? Because you talk about the youth or being younger, Ternus. You talk about continuity, being an insider. I mean, is that what really Apple needs? I mean, what does it really need? It's not what Apple needs right now.

5:36Apple needs a shakeup. Apple needs someone who's more AI-centric. And the board knows this. And in the conversations they're having within the board. The question is, do we really want the continuity pick? Or do we want someone who's an outlier or an outsider who could shake things up on the AI side? And what you keep coming back to is the fact that Apple is a hardware-centric company. They're a hardware platform that all these AI and other services run on top of. And you can't really run the AI unless you have the hardware there at the forefront, right? And so the hardware picture, at least for now, it does work.

6:09But let's see if someone else emerges in the next few years. I don't think that's going to happen. Apple is such a unique culture and a unique company that you really can't bring in an outsider. So all signs point to Ternus. Well, on Ternus's track record, Mark, one thing that surprised me, and I kind of let out this audible yelp in the newsroom when I got to this part of your story, was the missteps that he's had have been very prominent. I mean, two things that Apple moved away from that were widely seen as mistakes happened under Turnus' tenure. Talk about the keyboard, the butterfly keyboard issue and the touch bar.

6:46Yeah, he's not had a good run in the mid-2010s with keyboard-related items. You had the butterfly keyboard, which was a disaster and kept breaking for typing. You had the touch bar. Now, the thing I'll say about the touch bar and the butterfly keyboard, he was the engineering implementer of these ideas. These were two things that were pushed heavily by the design team at Apple at the time. And so he was really executing on the vision that they pushed him to execute on. The design team at Apple is in a different era. They are in lockstep now with the engineering team run by John Ternus because he also oversees the design teams now, both hardware and software.

7:24So I think that it's a bit of a different situation right now. Since he became senior VP, Apple's products have improved dramatically in terms of quality and features. I mean, you see the MacBook Airs and the MacBook Pros and the iPhones these days, the durability is just insane. So I do think that, you know, that was 10 years ago. Those are notable missteps under his watch when he was running Mac hardware engineering. But certainly there's been a lot of improvements since that time.

7:49Carol Massar:So, you know, I want to go back to how you started. You said Tim Cook, it could be next year, it could be two to five years. I mean, if it's longer, it actually gives, you know, Cook some more time to kind of figure out and maybe also continue to kind of guide the strategy of the company. I mean, a lot can happen, you know, in two, three, four, five years. So I'm just wondering how much is, you know, Ternus a sure thing? Well, the longer that Tim Cook is CEO, the odds go up that Ternus is a sure thing, because everyone else around Tim Cook on the executive team is just going to get older and older, you know, and so that is going to leave Ternus.

8:28Like if Tim Cook steps down in five years, Ternus will be 55, still giving him 15 years potentially in the CEO seat, maybe longer than that. Everyone else will have aged out. I mean, you have Eddie Q who runs services. He's pushing over 60. Greg Josuek runs marketing over 60. You have software engineering chief Craig Federighi, who's in his late 50s and has already declared publicly that he shouldn't and does not want to be CEO of Apple. You have a new CFO who's relatively young around Ternus's age, but Apple's not going to make a CFO, their CEO. You have a new COO who's about 60. And at this point, he's going to be too old to become a CEO as well.

9:14And so all of your options are gone. You had people talk about Jeff Williams for many years. He was the COO. They had been putting him in the driver's as a successor by giving him more product and design responsibility. But he retired at the end of last year, so he's no longer an option. There was all sorts of speculation about Angela Aarons, you know, six years ago when she was running retail. She's out of the company as of 2019, so she's no longer an option. So basically, you're out of options unless Apple's going to go external, which would be a massive shock.

9:45Carol Massar:Well, that's what I was going to ask you. What's the chance that they go external, or what's the chance that they bring back somebody who left, but who also knows the culture? Apple has a remarkably bad track record bringing in executives from the outside. Nearly everyone who they've brought in has been a failure from an outsider's perspective. They had their chief people officer, Carol Surface, who was out in two years. I mentioned Angela Aarons, the retail chief. She was out in five years. There's some other examples there as well, but it has not worked out pretty for them from an Apple cultural standpoint.

10:21And John Ternus, having been there for 25 years, makes it a lot simpler for him to be in the role. Lots of people at Apple. Oh, the other example I should give, by the way, is John Gianandrea, who was the AI chief. He came from Google and that was a complete disaster, right? So the track record on outsiders has been extremely poor, to say the least. Apple's run like a family business, right? For keeping it in the family, it's run by the family, the same people who've been around for a very long time. and so they're going to pass it on to the next member of the family, I think. Mark, we don't want to give the entire story away.

10:53It is one of the most read stories on the Bloomberg Terminal. It is today's big take. Everybody should check it out. It's not all you have on the terminal today. A couple other stories we wanted to highlight, a scoop from you, about adding search advertising to Apple Maps in a push to make services even bigger. What is Apple planning on doing to our Maps? Yeah, similar to Google and Yelp, restaurants, brands, stores, we'll be able to bid on search queries. So for example, a coffee shop in your area wants to bid on the term coffee. Probably that'll cost them a lot of money. But if they're the highest bidder and you search coffee in their locale, they'll pop up first as an ad on the search results.

11:34And that's an ad. So big advertising expansion for Apple. Obviously, Apple Maps is extraordinarily visible. They've been pushing ads for years now in the App Store, search ads included. They've been pushing advertising within the Apple News app and the news section in the stocks application. So definitely this is a big lever that they're pulling here to try to generate more revenue. The estimates are they made$8 million in iOS ads, or they're going to across 2026. Putting it in Maps is probably going to double that pretty quickly.

12:04Carol Massar:Hey, speaking of pulling a lever, you've got another story. Man, I mean, he still has time for us, Carol. What's the other story? I already forgot. What are we doing now? Apple's a start. It's AI comeback bid. Oh, yeah. Talk to us about that. What's coming up, this Worldwide Developers Conference, and what we might get in terms of AI levers? Yeah, as they reported, I think first week of January, second week of January, they're going to revamp Siri as a chatbot to compete with ChatGPT and Claude and Gemini and what have you. So all the focus will be on Siri and AI. Is this right that they report on, oh, yeah, May 1st?

12:39Carol Massar:I think that's an estimate. Apple? That's an estimate. Okay. So, Mark, yeah. That time frame is typical. WWC is typically for developers. I mean, that's the whole point of it. You get unveiling of iOS. Well, they announced the new OSs, right? So, they'll announce iOS 27, the other new operating systems. And so, yeah, developers got a bunch of new frameworks and tools, and consumers got a bunch of new features. But this year is going to be lighter than usual. This is all the all the features are going to be about AI this year. Everything else is going to be pretty minimal. So we're going to like Siri now?

13:13I have no idea. I mean, I know, I know what the features are going to be, but I couldn't tell you if they're going to work properly or not. And I couldn't tell you if consumers are going to like them. But I think if they work to an effective rate of 85 percent, 90 percent, that platform of over 2 billion users is going to pull in a lot of people. okay before we let you go shameless plug you and i are doing a live q a for bloomberg subscribers it's on thursday march 26 it starts at 11 a.m eastern time mark german it's an ask you anything of mark german you can send him questions ahead of time you can get in touch with us anything anything anything yeah people do we love it it's a fun time all right looking forward to it hey

13:54Carol Massar:mark thank you so much as always our mark german there stay with us more from bloomberg business This week daily coming up after this. They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. Life MD, it's just getting good. Visit lifemd.com slash goodlife. Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other?

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16:58Carol Massar:Just looking at our live blog on the U.S. war in Iran, we have President Trump saying that the Strait of Hormuz to reopen soon under joint control with the United States. Iranian media denying negotiations have taken place. We mentioned Brent crude falling back. We mentioned WTI crude falling back as well. And then President Trump suspended threatened strikes on energy infrastructure, or citing talks. So this is kind of the latest on our blog. Meantime, maybe we'll dig. We'll ask our next guest about what we have else on the blog. Okay. We can't leave it there, Carol. Okay. So I'm going to just read from this because Jennifer Welch, if you watch our program, if you listen to our program, you know her well at this point.

17:37She's chief geoeconomics analyst for Bloomberg Economics. She writes that several explanations could account for the contradictory messages from President Trump and Iran over talks to end the war. The most likely explanation is the U.S. is pursuing negotiations as the president searches for an off-ramp but exaggerating progress in an attempt to reassure markets.

17:55Carol Massar:All right, so that might explain, right, the contradictions that we are seeing. Hey, we wanted to get, we're going to get a view from the White House in just a moment and really the national security aspect from the United States. But right now, we want to get a view from the region. We head to Istanbul and to Bloomberg News, Middle East and North Africa. Managing Editor Onor Ant, he oversees editorial direction and newsroom operations across the region. And so delighted to have him with us. Onar, thank you so much. I know it's a little bit later. Where you are, we are trying to understand exactly kind of what feels like contradictory statements from the White House, the U.S.

18:32Carol Massar:versus what's coming out of Iran. Set the record straight. What do we know? Well, we know that U.S. President Donald Trump backed down from his earlier threat to strike Iran's energy sites if straight and foremost is not reopened by the end of his 48-hour deadline, which he started on Saturday evening. So basically, in about six or seven hours, that deadline would have expired. But earlier today, very early in the morning in the US, all of a sudden, we have seen that President Trump posting several messages on social media, followed by his in-person remarks to reporters in the US, where he said, unlike what he had said before, that he was talking to Iranian officials and that a deal was possible.

19:26And therefore, he gave Iran a five-day reprieve, basically promising not to hit any energy assets in the Islamic Republic until Saturday. Those remarks were followed by repeated claims by Iranian media that said such talks never really happened. Iran, in fact, did not respond to U.S. requests for negotiations. And the fact that Trump backed down from his earlier threats was basically down to the Iranian response to earlier U.S. and Israeli threats in the region and basically a function of how the war has so far unfolded. Those are the sort of two emerging main narratives coming out of the U.S.

20:15and Iran over the last few hours. So then how do we explain the public statements differing from what we know is happening privately and the differences that we're hearing from Iran saying, wait a second, no, we are not having any discussions? It's not extremely surprising. Obviously, there is this one marginal possibility that everything that's coming out of the mouth of the US president is completely false and a lie. It's plausible, but it's not very likely. What is more likely is the fact that what's happening now is a continuation of what we have seen so far during the conflict and even before the conflict.

20:58Iran and Iran's administration sees this war as an existential one, and they do not want to project any sign of weakness to their own public. So even if there is a back-channel negotiation going on with the U.S., which seems to exist, judging by all the reporting that we have done over the last few hours, they do not want to portray this as a negotiation between the Islamic State and its adversaries in an existential war. But instead, they would like to portray this as a case where Iran has retaliated so violently and so strongly to previous U.S. and Israeli attacks since the war began about 24 days ago, that right now the U.S.

21:44is forced to sort of backtrack its earlier threats and steps in the war, putting Iran in this position of power and superiority in the war. So that's where I think the inconsistency is mainly coming from.

22:01Carol Massar:I want to ask you, because as you said, I think it's safe to say that many would point out that on both sides, you could question the messaging. And what is fact? What is maybe a little bit of a, you know, massaging of the message? And the same thing out of Iran. How do we trust what we're hearing out of Iran as well? Okay, it's not very easy, and we have been very adamant in our efforts to filter out propaganda from the actual messaging. That said, today, immediately after Trump's truth social posts that said that he was in talks with the Iranian leadership, we have seen a concerted effort by Iranian state-linked media outlets trying to counter that message with the message that I just explained a couple of minutes ago.

22:59This is clearly centralized. So yes, we are trying to filter out the propaganda, but there is a clear emerging pattern in Iranian media today that shows the messaging coming out of Tehran was highly centralized. And it is a closely choreographed place. We cannot talk about free media that is free to report on anything it wants. So, let's say that we do see an end to the conflict in the coming days. What does Iran look like post this war? That is a very difficult question to answer, but I will do my best. According to what the U.S.-Israeli alliance said since the beginning of the war on February 28, thousands, more than 7 ,000 targets in Iran have been hit.