The product guys

Is Apple Inc a product company, a services company, or a supply-chain company? Under Steve Jobs, it was, arguably, a product company, transforming the music industry with the iPod and then the mobile-handset sector with the iPhone. But neither of those was, in fact, an innovation; they were just better-engineered and — crucially — had better software and provided a better experience than their competitors did. So perhaps Jobs was a services man. His successor, Tim Cook — who leaves his position as chief executive officer (CEO) after 15 years in the job — was initially derided as “not being a product guy”. And, indeed, the iPad, iPhone and Macbook remain the mainstay of Apple’s product line. But Mr Cook’s achievement has been to finetune Apple’s far-flung supply chain, squeezing every inch of margin out of it even as the geopolitical environment in which he operated became far more complex than anything Jobs had to handle. He managed to ensure that Apple’s customers stayed ever more loyal, putting up with ever higher prices in order to stay part of the ecosystem. It would always be hard for a relatively unassuming executive to take over the job, given the larger-than-life image of Jobs, the company’s cofounder; but Mr Cook became associated enough with his position for United States President Donald Trump to famously mis-speak his name as “Tim Apple” during an Oval Office meeting in 2019. 

Mr Cook’s successor, John Ternus, is very much a “product guy”. He has been Apple’s hardware chief for five years, leading work on home devices as well as wearables — some of which, reportedly, he will now get to introduce at the company’s much-anticipated fall showcase event. Apple is still searching for its next big thing. It gave up work on creating an Apple-branded electric vehicle — a decade-long effort called Project Titan — in 2024, even though it poured cash into the project and recruited aggressively. Its own virtual-reality headset was priced too exorbitantly to make an impact, meaning that Meta dominates that market — and the same company has now beaten it to smartglasses (revisiting a product that Google first put on trial in 2014). Samsung and Motorola both have multiple phones on offer with folding screens, and Amazon edges out Google for market leadership in smart-home systems. Mr Ternus will have to revisit one or all of these product lines if Apple is to retain its overall leadership. All this, while growing his predecessor’s legacy in services — through Apple Pay, Apple Music and others, the services section of the company makes more money today than the entire corporation did when Mr Cook took over. 

Mr Ternus himself seems to think his biggest challenge will be dealing with artificial intelligence, in which his company is far from being a leader. That he thinks so is perhaps another sign of Mr Cook’s success. In actual fact, Apple’s biggest challenge over the next decade will remain managing its supply chain. A sign of the importance of this work is that Mr Cook will remain in the company, this time as executive chairman. Apple’s big bet that India could reduce some of the pressure on the Chinese segments of its supply chain seems to have paid off for both the company and the Indian government. But the era of tariffs and economic nationalism is far from over, and future shocks will severely test Apple. Mr Ternus will be lucky if he can ride out the storm as well as Mr Cook has.