Apple’s got a new CEO: The Vergecast Livestream

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1:45David Pierce:Welcome to a live Vergecast, the flagship podcast of John Ternus, who we have to be nice to now because he's the new CEO of Apple. Is that how it works? Hi, Eli. It's been a day, my friend. It has been a day. Right at the end, we're emergency broadcasting. So the news, obviously, Tim Cook stepping down as the CEO of Apple. John Ternus, the not quite new, soon-to-be CEO of Apple. Neil, we've got a bunch of stuff to talk about, but I'm just curious. Immediate reaction. Are you surprised, A, that this happened, and B, that it happened today? I am very surprised it happened today. I'm very, very surprised to happen today.

2:29Apple just turned 50. Tim Cook did a raft of interviews during that time in which he said he was not leaving anytime soon. Which we should say is technically true.

2:41David Pierce:He's staying as the executive chairman. There's a quote that more or less makes it sound like Tim Cook's new job at Apple is to be the person who gets yelled at by politicians. So he is not technically leaving. So I'm sure there will be people at Apple who will tell you he was not technically lying. And yet here we are. Yeah. I mean the role of executive chairman, guy who gets yelled at by Congress and by foreign governments, is like a storied Silicon Valley role. The immediate comparison I would make is to Eric Schmidt, who was the CEO of Google. He was the adult supervision for Larry Page and Sergey Brin.

3:17Larry Page became the CEO. Eric kicked himself upstairs to do politics and in particular run around and get yelled at by Europeans. So this is a pretty standard arrangement. Again, it's just the timing that really gets me because it's a sort of out of nowhere on a Monday evening. It's not like a Friday news dump. There was no rumble that was going to happen. And I, in particular, was expecting it to happen around the iPhone. Interesting. Right. I assumed that we would get a John Ternus iPhone introduction and then a one more thing. Our hottest new product is John Ternus. I had that staging in my mind.

3:56I wasn't expecting a sort of bomb to go off right after Apple 50. But again, the news is not surprising. I think we all knew it was going to be John Ternus. You and I have interacted with John Ternus many times over the past several years. He's always been very kind. He's in it. Like he is a hardware person. He will argue with you about USBC. So I'm excited for that turn for Apple in that specific way. And I'm not at all surprised that Tim Cook is going to stick around and manage China and manage Donald Trump. Like that is a totally different set of skills.

4:31David Pierce:Yeah. Yeah. So is that your read of the breakdown? So basically, John Ternus, who was the SVP of hardware engineering, is becoming CEO. So Johnny Shrooji, who has been an interesting figure inside of Apple, there were rumors not that long ago that he was leaving. There's been this kind of executive parade out of Apple over the last 12 months. Some people saying essentially, this is great news. Thank God they're gone. Like Alan Dye, who was doing design and a lot of people thought not very well. And then there have been a bunch of people who have left that were bigger losses. Johnny Shrooji, there were rumors he was going to leave.

5:07David Pierce:He quashed those pretty aggressively. is now getting John Ternus's old job, but then a little more. His new title is Chief Hardware Officer. And I believe you're the titles expert on the Verge cast, but I believe Apple is one of those companies that is very deliberate about titles. And so the idea that it's giving Johnny Shruji a C-suite title is a big deal. So this is like, this is two hardware people being elevated to very important new positions inside of Apple. Should we take that as the sort of obvious sign that it feels like it wants to be that this is a company like doubling down on its hardware business?

5:43I mean, Apple has always been a hardware business. It's pretty hard to get Apple software without Apple hardware, except in the case of Apple TV, which is both a gadget, a service, a piece of software, a studio insert. Who knows what is going on there? That's the only truly horizontal piece of software they have that people talk about. Apple Music is another one. But that's about it really. I think Johnny Shurji is a really important Apple. There are a lot of people who thought that Intel would poach him. There are big jobs he could take that he is more than qualified for. I think Apple needs to keep him.

6:21And the future of their products is so intimately tied to their chip roadmap that elevating the person who has led all the chip design. into the role of sheep hardware officer. It makes a natural kind of sense. What we don't know is whether Sergi is any good at actually making hardware. He's great at making chips. He is very good at making chips. There's lots of other bits and bobs that go into a great piece of hardware. That said, John Ternus is still going to be there. His background is hardware. You expect him to pay some attention to that as well. On the title front, Apple has usually, like historically been really tight with titles.

6:59You can get up to SVP and that's where you live. And famously, Steve Jobs used to tell people that once they had an SVP title, they had no more problems. Like their problems were their own. In the Tim Cook era, that has totally been changed. Like everybody has had fake titles forever in the Tim Cook era. That's how he has managed his team. Like you're getting poached. Here's a chief nothing title. Johnny Ive had the chief design officer title. It literally meant that he was retired. So it's unclear what this actually means in the day-to-day, but given their emphasis on owning the whole widget from chips to software to distribution to market, you can see that this probably feels like more of a real title than not.

7:40David Pierce:Yeah, I think that's right. I mean, and I think I've been looking around seeing just sort of the immediate reactions. I went to CNBC where they started talking about the stock price and all this stuff this is going to mean. And there's this swirl of stuff going on inside of Apple that I think is really complicated to pull apart and is going to be really interesting to see how it changes or doesn't with a new CEO. So there's Apple, the hardware company, right, which it fundamentally is. Apple is the iPhone company more than anything else. But it also has these other giant hardware businesses. It sells a lot of hardware.

8:09David Pierce:It sells at huge margins. It has done so for a very long time. Apple is also increasingly a services business. And this is the bit of CNBC. I'm a financial genius now because I watched eight minutes of CNBC while I was getting ready for this. Apple wants to be perceived as a software company making software margins, which is one of the reasons it has been pushing harder and harder into services. It has fought tooth and nail to continue to extract its 30 % from everything that happens on the iPhone. There's a sense that, okay, even if the growth of our hardware business is going to stall, we're going to find more and more ways to make money from people.

8:43David Pierce:then there is this mess that is ai and apple intelligence and siri which apple has largely whiffed on but i think in a funny way has sort of come around on apple where like actually being the company competing to make the frontier model that causes the most problems is not a great place to be and instead being the hardware on which everyone will do these things and thus you can extract your 30 rent becomes very important so like there's there's all this stuff just swirling around and And I feel like one easy read of this would be to say that, OK, Apple has seen all of this. And even if you think AI is the future, Apple's big bet is that being the hardware maker of the AI revolution is going to be vastly more important than like trying to go poach Demis Asabas from Google to come run your company and be an AI company forever.

9:29David Pierce:Did I just twist myself into knots or does that make any sense? You're a little bit twisted, but let me help you untwist it. OK. The Tim Cook era is defined by Apple squeezing every dollar from every part of its business that it can. And boy, has Tim Cook been good at that. He has. And I'm not even saying the products are good or bad. I'm just saying it definitionally. The thing that Cook has done is say, well, we've run out of countries to sell iPhones in. and even if we spend all of our effort getting 10 % more users to switch from Android, that won't move the needle because we're already so big.

10:06So what we're going to do is make all the apps subscription apps and make all of our money every time you push a button on the iPhone and we're going to fight tooth and nail with epic games about Fortnite in-app purchases, whatever it is. That has worked. On the other side, every product line at Apple has now sprouted into 10 ,000 configurations I can't tell you what an iPad is there's so many of them that it like boggles the mind and you know the iPhone is now 50 different iPhones oddly the Mac has gotten more constrained you know you get the feeling Tim Clark doesn't pay as much attention to that but like every other product Apple is just like so many configurations at so many price points every price point from zero to ten million dollars there's an Apple product for you

10:53David Pierce:and there have been rumors recently about Apple both pushing further down into cheaper prices and higher into luxury prices. Like this is a company that would like to sell you every imaginable thing at every imaginable price. Okay. And there's, there's the thing that Tim Cook is probably best known for, which is the like unbelievable supply chain work that he's done over 15 years, right? Like you talk about squeezing dollars. No one in this business is better at that than Tim Cook. And so it's like, I think he has found a way to squeeze every dollar out of the company and every one of its products in every way is like a perfect summation of Tim's Legacy.

11:28David Pierce:And you can either like that or hate it, but it is, boy, has it been good for business. It is impossible to understate how hard that is. Yeah. Very few companies where people can pull off just the one product. We're going to make a new iPhone every year at iPhone scale, and they do it every year without missing a beat. That is one of the most impressive feats in business history, in manufacturing history, in anything history. Like there are armies that don't operate with as clean logistics as Apple operates the iPhone supply chain. That's remarkable. Here's my big criticism of the Tim Cook era.

12:07They don't make enough stuff. They like simply do not have enough products. They're not taking enough shots. And when they do take the shots, they put too much pressure on them in like weird ways. The example I always go back to, just I think it's funny, is the introduction of the Apple Watch where they just like overloaded the Apple Watch with expectations and hype. And Bono was there and we all had to pretend the digital crown was an input method. I knew you were going to say it. It's just like – it's so funny to me. Like the Apple Watch is –

12:39David Pierce:The digital crown was going to be as big as the touchscreen. That's like a real thing that they said. They made that case. And it's like, guys, you don't have to – you can just have more products. you can just try more things and see what works the the vision pro is the same way they just like overloaded this vr headset with all of these expectations because they weren't trying enough things right because they're the tim cook era is so much about optimizing the things that already exist and certainly there are products during his tenure that are very important like airpods are very important you make you can go down the list there's a lot of important products that came up but all even airpods are like now there's 50 variations of airpods yeah and so they're just weren't enough shots and i'm kind of hoping that the turnus era combined with sort of the pressure of the ai era where everyone is trying to find the new thing because ai does feel like a meaningfully different way to interact with a computer that they just take more shots right not in the like crazy samsung way but just in the like they should make a home device that you can talk to they should expand airpods and doing something else and i i'm kind of hoping that having a hardware person at the lead makes them like try more things without all of that pressure.

13:52I'm not sure that they will, but that's my criticism of the Cook era is that it was so deliberate because everything had to scale to a huge number that sometimes their failures were even bigger failures than they needed to be.

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16:57David Pierce:I mean, I also think you can look at the relentless drive to scale everything as a big part of the reason Tim Cook has made the political choices that he's made. You present Donald Trump with a big gold plaque because you want to make more money selling iPhones. Like, it's just what it is. And you can chalk that up to straightforward business logic. And I'm sure that's what Tim Cook would do. Like, this is the price of playing this particular game. but I think he has spent a lot of time during the Apple Fit to Celebration and even in some of his goodbye letter talking about the values and the beliefs of Apple.

17:32David Pierce:And I think the case against Tim Cook's legacy will be that he built this company into a hell of a business and kind of lost its soul. But what I wonder is, to your point about the products, I think the part of me that's really excited about somebody like John Ternus is that there is somebody who thinks about and sort of lives inside of hardware back in charge. Like that's just an exciting and cool thing. The flip side is he's been at Apple for 25 years. Like this is not a cultural revolution higher on its face inside of Apple. Which is why I think you do this this way if you're Apple. This is not Tim Cook being forced out.

18:11David Pierce:This is not Tim Cook leaving on bad terms. Like it's very clear this is being done in a way that everybody thinks sets Apple up for success. And in part, that's being done because his successor has been at Apple for 25 years and knows the company just about as well as anybody. He's been on the executive team for five years. He's been a high-level executive there since, I think, 2013. Like, he is as Apple as Apple gets. And I think there is just something, like, in the walls at Apple that doesn't let you try and fail publicly, right? I think all the time about this thing Google executives used to say, which is that one of the challenges of working at Google is that if you make something that doesn't reach billions of people, they'll kill it because Google's only focused on things that reach billions of people.

18:59David Pierce:So if they don't see potential for that, they'll kill it. But what Google will do is ship it. They'll ship every possible iteration of it, see what happens, and then kill it. And I actually – like the way Google does it is really haphazard and sort of ridiculous. but like i also give amazon a lot of credit there was that run at amazon where they were just like we're going to ship every single thing we can even think of to make with alexa in it some of it won't work some of it will this is the only way to find out um apple is the precise opposite of that right like this is the thousand no's for every yes company and you can chalk that up to apple misses less often than almost everybody but especially now at this moment where we have absolutely no idea what the next version of hardware is going to look like.

19:45David Pierce:Everybody thinks it's pins or it's glasses. I don't think it's either of those. I think it's something else that no one has done yet. It seems very unlikely that John Ternus is going to be the one who's going to be like, let's try a bunch of stuff in public and see. Oh, I don't think that's going to happen. And I'm making the comparison to Samsung on purpose. Samsung would ship them all too. They would absolutely. And they have. Yes, they have already. Samsung and Google and that version of Amazon, it's not like they won, right like google has a bunch of very big products but they are also well known for killing things that people liked and apple has its reputation for a reason i don't think i don't think turnus is going to break that what i'm getting at is like only trying to manufacture big winners prevents you from ever seeing anything new and it's what leads you to getting caught flat-footed yeah and by all accounts apple is caught flat-footed by everyone using chat to be to just like fall in love with their laptop and then they scrambled to understand it they scrambled to launch Apple intelligence.

20:42This failed because not everybody wants super spell check to just interrupt them all the time. And then they got lucky because the turn the AI needed to take where it actually replaced the touchscreen as your primary interface did not happen. It hasn't made apps yet. You and I are talking every week, there's some sort of app store for AI moment that needs to happen and no one knows how to do it or how it will work. And so that's not really what I'm getting at. What I'm getting at is they're not – there's so much pressure on every product to be a hit in the Cook era that they didn't make anything that wasn't hits.

21:20And so even things that you could make that were great in an Apple-y way, they haven't done it. Like the HomePod. The people in our chat are talking about the HomePod. You could have just iterated on the HomePod.

21:31David Pierce:Yeah. There could have been a screen on the HomePod 500 years ago and they just didn't do it. I don't know why they didn't do it. I don't know what that argument looks like. I'm just sort of curious if having hardware people at the top changes the dynamic of that argument. And they say, we have to at least start with something that we can make great. So when the time comes, it's ready. Like we've built the foundation for that. And I think they did that a lot in the jobs era. Not for nothing, it was just Apple 50. So we've all read the coverage. Like you and I both flipped through the David Pogue book.

22:03There was a lot more of that going on in the jobs era. I don't know if John Dernus is Steve Jobs, but maybe some of that spirit comes back.

22:10David Pierce:Yeah, it's an interesting one. The HomePod is actually sort of a fun example because I think the thing the Jobs era Apple did really well was ship the thing that got you to the thing, right? Like one of the funniest parts for us going through trying to pick the best 50 Apple products ever was the first one, the one that was like the groundbreaking, brand new, incredible idea almost never was great. It was like a great idea. It was a big idea. It was a fascinating product. It was a fascinating launch. And then it's like the second or third one is actually when it became a really good product. And that requires a lot of dedication and a lot of interest in continuing to move the ball along, again, sort of in public.

22:52David Pierce:And there's been a little bit of that at the cook era Apple, but to a much larger extent, it feels like what we've seen are much smaller ideas that are much less likely to miss. And when they do something that doesn't hit the HomePod being a perfect example, Apple kind of just pretends it doesn't exist. Like they just, they just mothball it and don't talk about it anymore and sort of hope that it falls off the face of the earth. And the funniest thing about the HomePod is like lots of people who have HomePods really like them. They sound good. And the problem was it was way too expensive. And so it's like, if you just keep revving that thing, which again, maybe somebody who is sitting in the hardware in a different way and can see the roadmap differently and sort of understands how we get from here to there in a much deeper way, looks at it and says, okay, I'm actually going to be able to sell the thing that we wanted to sell in three years.

23:39David Pierce:But I have to sell this one to get there. And that just requires being willing to play a different kind of game with your products then i think cook just really liked delivering perfect polished objects and when that's what you want you you can only make a certain kind of thing with a certain kind of risk tolerance well also you know the cook era was defined or the touch bar which is the exception that proves all the rules we're never getting rid of this keyboard uh no i mean the cook era was defined by just absolute weirdness in the design part of apple yeah right again it is interesting that this is all happening after apple 50 so i can't help but think about the sweep here but steve jobs right before he died just ran around saying two things that i think tim cook had to overcome one he kept saying that he'd figured out tv and he finally cracked it and that was just a decade of bad ideas after that and then two he kept saying johnny i was the most powerful person at Apple.

24:39And so if you're Tim Cook, you're like, well, I'm not going to screw with that. And it turns out actually the most powerful person at Apple was Steve Jobs. Yep. And he was, and Steve Jobs was like, no, we have to make products that work that people like. And Johnny, I was like, what if it was super thin forever? And there was something about that dynamic, like made it happen. Right. And I think Tim initially deferred way too much to Ive. And you could see that as Apple like hired a bunch of fashion designers.