With the selection of a new CEO, Apple is getting back to what it does best.
The iPhone maker announced Monday that Tim Cook will step down as CEO effective September 1. john tarnasApple’s senior vice president of hardware engineering will be appointed.
Ternus joined the company in 2001 and most recently oversaw Apple’s new product lines, including the iPad, AirPods, iPhone, Mac and new models of the Apple Watch. He also oversaw hardware engineering efforts for products across all categories.
Analysts say giving the top job to a vice president of hardware rather than a head of software is part of Apple’s strategy to dominate devices in the AI era.
“That means a lot of the way forward has to do with hardware innovation: glasses, pins, flip phones. At some point, there will be virtual reality devices that are cheaper than the Vision Pro,” DA Davidson technology analyst Gil Luria said in an interview with CNBC on Monday. “There hasn’t been a lot of innovation in terms of hardware, but that’s what Apple does best.”
Read more about Apple’s transition
Hardware accounted for about 80% of Apple’s $143.8 billion in revenue in the quarter that ended Dec. 31. The remaining 20% came from advertising, App Store, and cloud sales. This has been a major focus and growth area during Mr. Cook’s tenure.
Luria said the move was “good news” for the company and the strategy should be “reassuring” to investors.
“They’re spending a lot of money on R&D and capital investment by standards, but it’s clearly a rounding error when you compare it to what Amazon, Microsoft, Google, and Meta are spending chasing the top models,” Luria said, referring to R&D and capital spending on AI models.
Instead of investing in its own model, Apple partnered with OpenAI to integrate ChatGPT into its devices for “Apple Intelligence” functionality.
DA Davidson analysts added, “Eventually there will only be two or three major models, and they will all work through Apple devices because most consumers, especially those who want to spend money on subscriptions, use Apple devices.”
But Wedbush Securities analyst Dan Ives isn’t sure investors will view the deal as all positive.
“Cook leaves a lasting legacy in Cupertino, and there will be tremendous pressure on Ternus to succeed from the get-go, especially in the AI space,” the longtime tech bull wrote in a note Monday.
Patrick Moorhead, CEO of tech research firm Moore Insights & Strategy, told CNBC that Telnas is not a “risk-taking visionary.”
“What I expect, and what the public expects, is tight business execution, margin management, and incremental product iteration,” Moorhead said.